Three persons are in the race to being elected as a shareholder director in Punjab National Bank (PNB), the country’s second largest public sector bank, at the upcoming extraordinary general meeting (EGM) of shareholders on March 17.
The Board of Directors of PNB had, at its meeting held on Friday, found three candidates — out of total nominations of four persons received by the bank as of March 2 — as “fit and proper” for being elected as a shareholder director of the bank, sources said.
PNB convenes EGM to elect a 2nd shareholder director to its Board
The three persons, all aged 66 years, who are in the fray are Gautam Guha (from New Delhi), Padmanabhan A A (from Chennai) and Ramesh Chandra Agrawal (from Prayagraj), they added. All the three have experience in the area of banking.
PNB is now looking to rope in its second shareholder director on the strength of a recent Finance Ministry decision empowering Public Sector Bank (PSB) boards to act on the decisions that remained held up at various board-level committees due to lack of quorum arising from vacancies or recusal by existing directors.
PNB to raise ₹2,500 cr via AT-1 bonds by March 15: CEO
A shareholder director is one who is elected from among shareholders other than the Central government. A public sector bank has two main categories of shareholders — Central government and ‘other shareholders’ (public shareholders). In India, all the public sector banks are listed entities although none of them are registered as companies under the Companies Act. There is separate legislation to govern the Board composition of such PSBs.
The elected shareholder director is finally appointed by the Nomination and Remuneration Committee (NRC) of the bank Board concerned. PNB currently does not have the requisite NRC strength and is therefore looking to get another shareholder director through Board approval route after election of such a director by the shareholders of the bank at an EGM.
Recent QIP
PNB has moved to get another shareholder director after its recent nearly ₹3,788-crore qualified institutional placement (QIP), which saw the Centre’s shareholding in the bank drop from 85.59 per cent to 76.87 per cent. With the Centre’s shareholding coming down, PNB became technically eligible to have two shareholder directors.
Having an additional shareholder director on a Board is useful for banks like PNB as all shareholder directors are counted as independent directors for the purpose of compliance with SEBI regulations for listed entities.
In public sector banks, there are executive directors appointed by Central government, there is government nominee director (official of Central government), there is an RBI nominee director, two employee directors (representing workmen and officers) and other directors (shareholder directors).
This will be the second shareholder director for PNB besides Asha Bhandarker, who was elected on September 12, 2018, for a period of three years.