Mumbai: An investor advisory has blasted the corporate governance practices at State Bank of India, saying the nation’s largest lender is weighed down by its own laws which mostly overrule all other regulations, making a mockery of the rights of public shareholders.
The immediate reaction from Institutional Investor Advisory Services (IiAS) is the invite that SBI has sent out to shareholders for an EGM on June 17 amidst COVID pandemic, as the State Bank of India Act of 1955, which created it, does not envisage or allow it to hold the extra-ordinary general meeting digitally/electronically or even an e-voting.
“SBI’s ability to become a beacon of good corporate governance is being scuttled by the half-century old State Bank Act, 1955. It is compelled to hold a physical EGM on June 16 at a time when the COVID-19 pandemic is raging,” IiAS says in a note, calling up on the board to advise government to amend the SBI Act.
Stating that SBI shareholders have lesser rights compared to shareholders of other companies, it notes that “SBI continues to be governed in a quaint manner” by not making the changes that allow public shareholders to assert their rights, even though the SBI Act has been modified over the past half century, “but the investors have not been allowed inside the tent”.
The public own around 20 per cent of SBI valued at Rs 27,300 crore.
“The SBI Act ensures that all the progressive changes that Sebi or any other regulator makes for listed companies, SBI need not follow them even though a listed company it’s accountable to its public shareholders and therefore should not be allowed to operate in isolation,” it says, adding SBI board must advise government to ensure that public shareholders enjoy the same rights as in any other listed company.
It can be noted that the SBI Act allows for votes to be taken either by show of hands or by a poll. It cannot even issue a postal ballot, cannot allow e-voting, and holding a virtual meeting remains a far cry.
“But these are relics of the past ages. Beyond the convenience, an e-voting facility provides, it importantly changes the way votes are counted and called for e-voting also given the times we are in.
“E-voting can be an important shift, since the decisions will be weighed by actual shareholding, not by those that have the time to attend a general meeting,” it said.
State Bank called for a public gathering of its shareholders at its auditorium here on June 17 despite the corporate affairs ministry allowing all other listed companies to hold virtual meetings due to the lockdown.