Why not Independent Directors in time?

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India is today proud to have many public sector companies that have high quality managements and can give any private companies in the same industry segment a run for their money. The NTPC, BHEL, ONGC, IOC, BPCL and GAIL are some such examples, having excelled in their businesses despite being hamstrung by government interference and influence in their decision making. The Central Government’s apathy and casual approach towards these companies are once again visible, this time on the critical issue of composition of the board of directors which presides over the efficient management and future of any company.

The role of Independent Directors on the board of a public sector undertaking (PSU) assumes even greater significance in view of the Government’s interference in the functioning of these companies. Independent Directors can act as a counter influence and balancing factor in the interest of the company. But it is an irony that the role of the Search Committee which recommends the names of Independent Directors for public sector companies itself is under a cloud. The recent appointment of some Independent Directors with questionable credentials has raised a big question mark on the process of selection by the Search Committee. At the same time, major PSUs waiting to launch their IPOs and FPOs are waiting for appointment of Independent Directors. The role of the Department of Public Enterprises is also

debatable. PSUs urgently need fresh capital to face increasing competition, a tough business environment and a tight liquidity scenario. Disinvestment is one way which not only ensures an inflow of capital but also brings in more efficiency and transparency. But PSUs like the BHEL, ONGC and RINL are unable to raise capital through IPOs/FPOs because they are short of Independent Directors and are thus not eligible to tap the capital market under the guidelines mandated by market regulator SEBI. It is indeed intriguing that the Government fails to appoint Independent Directors in time even when they are appointed for a fixed tenure and thus the Government knows well in advance when a particular Director will retire.

The Government needs to pull up its socks. Independent Directors should not only be appointed as soon as a vacancy is created but those who make the cut should be of impeccable credibility and track record. With this issue, Bureaucracy Today is introducing a new column for the aspiring bureaucrats. Senior bureaucrats will share their experiences, explain how they cleared the UPSC exams and will give insights into how the candidates who have cleared the mains should handle the interview. We hope aspiring bureaucrats will get invaluable guidance through this column.

Suhaib Ilyasi

SC to examine procedure for appointing SEBI chief

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The Apex Court said on Friday that it will examine the new procedure for appointing the chief of Securities and Exchange Board of India (SEBI). The court will take up the case on November 21.

The Attorney General has told the court that the Centre will file an affidavit within two weeks.

Today, the court heard a petition filed by former Air chief S Krishnaswamy and two others. The petition says, as per the new procedure adopted for selecting SEBI chief, a five-member selection committee is put in place instead of an old, three-member committee.

The petition further says, Finance Minister has been allowed to nominate two persons in the selection committee, and hence, the market regulator’s independence is taken away.

It also states that SEBI is controlled by few persons in the Finance Ministry and extension was denied to SEBI’s ex-chief CB Bhave to protect illegal actions of private players. The petition claims that functioning of SEBI is hampered by political interference and unholy nexus between corporate houses and political bigwigs.

Suhaib Ilyasi