Mutual Funds Express Strong Concern About Political Appointments to the Boards of State-Run Enterprises
Some of the best investment businesses in the country don't think it's a good idea to put people with political histories on the boards of public banks.
Moneycontrol reports
These include Axis Mutual Fund, UTI, DSP, Sundaram Mutual Fund and Union Mutual Fund.
These include Axis Mutual Fund, UTI, DSP, Sundaram Mutual Fund, and Union Mutual Fund.
These companies think that having people with political ties on the board makes it harder to make important decisions.
In such cases, the company management may lose focus on its business goals.
Some fund houses expressed support
Some fund companies say that public banks often don’t tell people if their board members have political backgrounds.
However, many of the country's largest Mutual fund houses have also extended support
HDFC, SBI, ICICI Prudential, Kotak Mahindra, and Nippon India Mutual Fund are big companies. They agreed to let people active in politics join their boards
Which appointments were opposed?
In the quarter ended September 30, mutual fund companies protested against a dozen director-level appointments in PSUs.
The protest list included major companies. Examples are ONGC, Coal India, NTPC, and Bharat Petroleum.
Smaller companies showed a similar trend. These included Railtel, Chennai Petroleum, and Mangalore Refinery.
In August, Bharat Petroleum Corporation Limited (BPCL) sought shareholder approval. They wanted to reappoint Gopal Krishan Agarwal as an independent director.
Fear of Influence on Corporate Decisions
Gopal Krishna Agarwal has held various roles related to policy making and administration.He has also served on the board of the Indian Institute of Corporate Affairs and, according to his website, is a national spokesperson for the Bharatiya Janata Party (BJP).
His reappointment was opposed by some other fund houses including Union Mutual Fund. Similarly, Sundaram Mutual Fund opposed the appointment of Ashish Chaturvedi to the board of Bharat Heavy Electricals Limited (BHEL). voted against
Chaturvedi is a former columnist and has also served as a spokesperson for the BJP.
Sundaram Mutual Fund explained its reasons.
In its voting report, Sundaram Mutual Fund stated that
Ashish Chaturvedi, 47, has 16 years of experience in the education sector and over a year in the corporate sector.
Public sources indicate that he has political affiliations.
We believe that such appointments may introduce unnecessary political influence into the company's decisions.”
Conclusion
Experts say that when companies use clear and fair rules, investors trust them more and feel more sure about their money.Become more honestand
trustworthy towards the public.