IIM Calcutta, which did not send its amended MoA for the HRD ministry’s approval

New Delhi, Jan. 30: The Indian Institutes of Management (IIMs) are set to enjoy more freedom in managing their affairs, including appointing chairpersons as well as directors, and in property transactions.

A memorandum of association (MoA), which prescribes guidelines for the premier business schools, has been amended by the Union human resource development ministry.

The changes allow the institutes to take decisions on their own in administrative matters, including opening campuses abroad.

The ministry has approved amendments to the MoA of IIM Ahmedabad, IIM Bangalore, IIM Indore, IIM Lucknow and IIM Kozhikode. IIM Calcutta had not sent its amended MoA to the ministry for approval.

Under the new MoA, the board of governors of each business school will recommend three names each for the post of chairperson and director whenever there is a vacancy. The HRD minister will choose one of the candidates.

This procedure will replace the existing process, which is entirely handled by the HRD ministry. Under the present system, the ministry sets up a search panel of experts to suggest names for the post of director. The minister then chooses a candidate from among the names recommended. For chairperson, the ministry seeks nomination from institutes and individuals and selects one for the post.

However, in the new system, too, the minister has the last word. But the IIMs hope that the changes will speed up the selection process.

The appointment of IIM directors used to take six months to a year. As a result, the institutes had to function without a regular director for a few months.

“The process of appointment will be different henceforth. The amended MoA will help the institutes to take decisions more rapidly. Decisions will be easier and faster. This is good move and the institutes will get greater say in every matter,” IIM Calcutta director Shekhar Chaudhury told The Telegraph.

He said IIM Calcutta was in the process of amending its MoA, after which it will be sent to the ministry for approval. The norms require the board of governors to amend the MoA first.

“The IIM Calcutta BoG (board of governors) is in the process of amending the MoA. It will be sent to the ministry in next one or two months,” Chaudhury said.

IIM Ahmedabad will be the first among the group to implement the new appointment procedure as its director berth will fall vacant later this year.

The amended MoA also allows the IIMs to open campuses anywhere it decides. This will help the institutes set up campuses abroad. A few IIMs have plans to spread wings beyond borders. While IIM Calcutta wants to set up a centre in West Asia, IIM Lucknow has plans for a campus in Dubai.

The IIMs, which are governed by the provisions of MoA, were unable to venture abroad since the earlier memoranda did not allow them to do so.

The amendments will also allow the institutes to buy property using their own corpus funds and sell. But they will have to inform the government.

However, the amended MoA has a provision that says the policy decisions of the government will be binding on the IIMs. “As long as the policy decisions are arising out of constitutional provisions or parliamentary processes, they will apply to the IIMs,” Chaudhury said.

IIM Indore director N. Ravichandran said the institutes have been enjoying operational and administrative autonomy since their inception. “By amending the MoA, the administrative and operational autonomy is getting more formalised,” he said.

Irregular members of the board of governors have bad news. Absence of a member from three consecutive meetings of the board will cost the person the membership. “The idea is to ensure that serious people become member of the board. If somebody cannot attend three consecutive meetings, the person will automatically lose his membership,” a source said.

The revised MoA also provides for reducing the number of board members to 15 from 20 to 25 in each IIM. The board cannot hold a meeting if two-third members are not present.