Question

Nayak Committee was setup by RBI. Consider the following statements:
1. Nayak Committee Recommended to Review Governance of Boards of Banks in India.
2. It recommended the Removal of Banking Nationalization Acts of 1970 and 1980, SBI Act and the SBI (Subsidiary Banks) Act because above acts require Government to keep shareholding < $50\%$
Which of the above statement(s) is/are correct?

• A. Only 1
• B. Only 2
• C. Both 1 and 2
• D. None of the Above

Answer 1

The correct option is A Only 1

Nayak Committee was setup by RBI.
Main Recommendations:

• Removal of Banking Nationalization Acts of 1970 and 1980, SBI Act and the SBI ( Subsidiary Banks) Act.Because above acts require Government to keep shareholding > $50\%$, and appoints CMDs and board directors
• Incorporation of all banks under Companies Act and constituting a Bank Investment Company (BIC) for the government to transfer its holdings in banks.
• Appointment of whole time directors in three phases with the help of Bank Boards Bureau (BBB).
• Reduction of government stake to less than 50 per cent.
• Recommendation on HR policy that could bring younger people into top management.
• Upgradation of board deliberation to provide greater strategic focus.
• Government should cease to issue instruction to PSBs to issue instruction to applicable only to PSBs as dual regulation is discriminatory