Government nominees will need approval before using vehicles provided by financial institutions

NEW DELHI: There will be no more free rides, quite literally so, for government nominees on boards of state-run financial institutions. The finance ministry has directed all government nominees on boards of financial institutions as well as banking and insurance regulators not to use vehicles provided by these institutions.

As per a ministry circular, the government nominees will require an approval before using vehicles provided by these institutions. "Higher approval on a case by case basis for travelling to attend specific official meetings or functions organised by that institutions which they (government nominees) are duly required to attend," it says. The measure is part of the finance ministry’s efforts to maintain an arm’slength relationship with state-run financial institutions, mostly banks.



"Utilising services, including cars may tantamount to freeloading off these banks. We do not want to encourage that culture," said a senior finance ministry official, requesting anonymity. Under the present financial services secretary, Hasmukh Adhia, the government has been pushing to minimise government interference in functioning of banks. The government is also looking to set up a Bank Bureau, which will search and select heads of public sector banks and help them develop differentiated strategies. Earlier this year, Prime Minister Narendra Modi had assured banks that the government would not interfere in their functioning.

"There is a difference between political intervention and political interference... there will never be any phone call from the PMO (Prime Minister’s Office," Adhia had quoted the PM as saying. "But as we are working in a democratic system...there will be intervention as and when required."

The finance ministry had then issued a directive to state-run banks, assuring freedom in their commercial decisions, transfers and postings. "Banks and financial institutions should take all commercial decisions in the best interest of the organisation without any fear or favour," the ministry said in a letter addressed to CEOs of all state-run banks, adding that no decision should be taken due to any "extraneous consideration such as the influence or the position that the borrower is holding".

The ministry had also assured banks that that there will be no government interference in transfer and postings within the organisations and directed banks to draw a well laid out transfer and posting rules and follow them strictly.