Around 10 public sector units did not fulfil the requirement for at least three months as of December, according to an analysis of 20 PSUs based on data sourced from the Nifty PSE Index and the National Stock Exchange (NSE).
“A prevalent issue appears to be a systemic tardiness and operational inefficiencies within PSUs, who often defer to their respective ministries for clearances, leading to delayed approvals and potential appointments based on patronage rather than merit,” said Shriram Subramanian, founder and managing director of proxy advisory firm InGovern Research Services.
The Companies Act mandates at least one woman director on the board for all listed companies, while the Securities and Exchange Board of India’s Listing Obligations and Disclosure Requirements (LODR) specify that the board of the top 1,000 companies by market capitalization should have at least one woman independent director. The provision covers PSUs.
Companies like Bharat Electronics Ltd. (BEL) and Bharat Petroleum Corporation Ltd. (BPCL) were among the few that have successfully met the mandate by having a woman independent director in recent years.
Coal India Ltd. (CIL), Container Corporation of India Ltd. (Concor), and Indian Oil Corporation Ltd. (IOC) did not have a woman independent director atleast for the last 3 years as per the information on exchanges
The list of non-compliant companies extends to Indian Railway Catering and Tourism Corporation Ltd. (IRCTC), NMDC Ltd. (NMDC), and Power Grid Corporation of India Ltd. (Powergrid), among others.
PSUs, including Hindustan Petroleum Corporation Ltd. (HPCL) and Hindustan Aeronautics Ltd. (HAL), have had women independent directors in the past three years, but tenures have ended over the past three to four months.
NTPC Ltd. and Oil and Natural Gas Corporation Ltd. (ONGC) had women independent directors until mid- or late 2024.
Persistent problem
This problem isn’t new. Former Sebi chairperson M. Damodaran, in a recent speech on corporate governance, flagged how PSUs have historically lagged in compliance with gender diversity norms, citing the government appointment process as a convenient excuse.
Even a couple of years after the mandate came into force, 95% of the companies that were non-compliant were PSUs, he said.
“I can tell you that there are three very large public sector companies which are still in violation of the prescription that they should have a woman independent director even today,” he said. “They (a PSU) thought government ownership is the perfect defence for not doing what government has mandated should be done.”
Maulin Salvi, leader of corporate governance practice at Nishith Desai Associates, said PSUs face systemic challenges in adhering to diversity norms. “While private corporations have progressively improved gender representation due to investor pressure, global ESG norms, and performance-linked incentives, PSUs remain constrained by rigid hierarchies, bureaucratic hiring practices, and sectoral challenges.”
PSUs also struggle with deeply entrenched gender biases and a lack of proactive talent development, according to Salvi. “PSUs often have employment policies influenced by government directives, which can sometimes create rigidities,” he said. “On the other hand, private sector companies may have greater flexibility in implementing diversity initiatives and adapting to evolving best practices.”
Need strict implementation
Since having at least one female director is a Sebi requirement, the bourses have penalized certain companies for non-compliant boards. However, the PSUs had a justification ready.
“The PSUs would then get the penalty waived off, saying the ministry has not yet appointed [a woman independent director],” said JN Gupta, MD at Stakeholders Empowerment Services and former Sebi Executive Director. “The most important question is — if the lawmakers have not been following the law, then what happens to others?”
Penalties for non-compliance are not considered strong enough.
“In some cases, persistent non-compliance may lead to restrictions on board decisions and regulatory scrutiny. However, penalties against PSUs have generally been lenient, contributing to continued delays in compliance,” said Ajay Khatalawala, managing partner at Little & Co. “Stronger enforcement mechanisms, such as higher financial penalties, stricter deadlines, and mandatory disclosures on board composition, are needed to improve compliance.”
Gupta called for strict and bold action from the regulator to change things. “Sebi, to the best of my knowledge, has never taken action for non-compliance to date.”
Subramanian suggested that the Prime Minister’s Office issue a directive to all ministries stating that all PSUs should fully comply with the requirement of having at least one woman independent director.
