How about inserting a caveat to Clause 49? It wouldn’t apply to anything governed by a specific statute, such as PSBs. Regardless of whether the bank was listed or not, regardless of the extent of public holding, the Centre’s iron hand would rule over shareholders. Appointment and retirement of directors would be a government prerogative. Since February 19, when the requisite notification appeared in the gazette, 17 directors elected by shareholders have reportedly been asked to quit from 10 listed PSBs.

Cast your mind back to February 2005, when finance ministry made a fuss about granting more managerial autonomy to PSBs by leaving assorted decisions (acquisitions, closure of unviable branches, opening overseas offices, human resource policies) to boards. The buzzwords then were “competition, corporate governance, and independent directors”. But those were early days of UPA. With the empire striking back, the buzzwords now are “government control” and government is not to be confused with governance. If interest rates can be dictated to PSBs, and whether these should be hiked, why not everything else?

A few years ago, Rakesh Mohan coined the expression “lazy banking” for what PSBs did. Abhijit Banerjee and Esther Duflo (of MIT) described their experience in a PSB in the following way. “Everyone we met seemed busy and the managers sounded like they knew what they were doing. We did notice that everyone’s desk was strewn with memos, circulars and bulletins, full of instructions, exhortations and prohibitions, but we still thought this was going to be different.” But that didn’t change anything, least of all credit delivery.

... contd.