The appointment of independent directors to PSUs has come to a virtual standstill after the NDA government came to power in May 2014 — since then, 106 independent directors have resigned or completed their terms in 32 companies but their posts remain vacant.

According to information accessed from Prime Database, only BHEL appointed a new independent director during this period when it brought in Anami Narayan Roy, former Mumbai Police chief and ex-DGP of Maharashtra, last August.

The 32 PSUs, including blue chip names such as ONGC, Coal India, IOC, NTPC and SAIL, have admitted in their compliance reports submitted to the National Stock Exchange that they have failed to comply with norms specified in the equity listing agreement for independent directors on their boards.

For instance, Coal India Limited, which does not have a single independent director on its board, said in its submission that “CIL has intimated the same to Ministry of Coal and they are in the process of making appointment”.

Admitting that its board faced a “shortfall of 7 independent directors”, SAIL stated that the “proposal for nomination of additional independent director(s) is under process by the Government of India, Ministry of Steel”.

In 2014, Sebi had made amendments to Clause 49 of the listing agreement for all companies, stipulating that a board should have at least 50 per cent of directors as non-executive or independent directors with at least one woman director.

The absence of independent directors on PSU boards raises questions of corporate governance and poses a challenge for the government’s target of raising Rs 41,000 crore through minority stake sale in these companies.

The Department of Disinvestment is already in the process of appointing merchant bankers for stake sale in 10 state-owned companies — Oil India, Container Corp, NMDC, MMTC, ITDC, NTPC, Engineers India, BEL, Nalco and Hindustan Copper.

Experts, however, said that PSUs have in the past raised money through other mechanisms even though they were non-compliant with norms.

“We have seen in the past that listed PSUs have raised money through the Offer For Sale mechanism despite being non-compliant,” said Pranav Haldea, MD, Prime Database Group. Under OFS, the company is not required to file its offer document with the regulator.

In April, the government had tightened norms for the appointment of independent directors to raise the bar for corporate governance at state-owned banks and financial institutions.

These guidelines said that an independent director should be at least a graduate with 20 years of relevant experience, and should not be a member of Parliament or a state legislative assembly, stock broker or anyone who has already served on the board of a bank or financial institution for six years