With a view to ensure diversity on the boards of large Indian companies, the Companies Act of 2013 through Section 149 mandated the appointment of a woman on the board of a company having a paid-up share capital of Rs 100 crore or a turnover of Rs 300 crore.

The Securities and Exchanges Board of India, the regulator of listed companies and stock exchanges, revised its listing requirements to conform with the requirements of the Act. It was mandated by law that such appointments would take effect within a year of the enactment, and thereafter companies were given three months to fill vacancies once they arose. To ensure compliance, the Act prescribed a fine that could extend to Rs 5 lakh on the company as well as on each of the directors in default.

Advertisement

Even at that time, there were suggestions that the government had indulged in little more than tokenism, and that the measure would lead to companies choosing promoters’ female relatives to meet the legal requirement, without ensuring a qualitative difference in corporate governance. But it was expected that public sector corporations and professionally run companies in the private sector would comply with the provision in both letter and spirit.

Certainly, it was hoped that banks ~ in both public and private sector ~ that have wide fiduciary responsibilities would ensure compliance. A study conducted in 2019 revealed that over a fifth of the country’s top 500 companies had not appointed women directors. But shockingly, this study discovered that 10 of 21 public sector banks had not done so.

Thereafter, there were mergers of some banks and their number, overall, was reduced. But even today, two of India’s largest banks, the State Bank of India, and Central Bank of India, do not have a woman on the board. In the case of SBI, it isn’t the bank’s management alone that is to blame for this glaring lapse.

The government is equally to blame. It has nominated four directors to the bank’s 12-member board, and not one of them is a woman. Central Bank of India has an eight-member board, including nominees from the Central government and the Reserve Bank of India, and all of them are men. With a woman at the helm of the country’s financial affairs, the lapses are both inexplicable and indefensible.

When the government and the public sector display such a lackadaisical attitude towards compliance, it is unreasonable to expect corporates to comply with requirements, just as it would be unfair to penalise them for transgressions. From time to time, authorities report the levy of fines on companies that fail to meet the requirement to appoint women to the board. But in the case of public sector banks and enterprises, the fine will, in effect, be paid out of public funds. That adds insult to injury. This situation must change.