RBI PROPOSES BANK BOARDS

RESERVE BANK PROPOSES BANK BOARDS

RBI has proposed a stronger board for banks for improving governance and stringent norms for CEOs and whole time directors (WTDs)

The norms are applicable to private, foreign and public sector banks

Board members should not be member of any other bank’s board or the RBI and should not be either a Member of Parliament or State Legislature or Municipality or other local bodies

Board of directors of a bank should not be less than six and not more than 15, with a majority being independent directors

The board shall meet at least six times a year and at least once every 60 days

A director on the board of an entity other than a bank may be considered for appointment as director on a bank’s board, if the person is not an owner of an NBFC or a full –time employee and that the NBFC does not enjoy a financial accommodation from the bank

The upper age limit for CEO and WTDs of banks is suggested at 70 years

Based on the feedback, fresh guidelines will be issued 

The next norms will come into effect within six months after being placed the RBI’s website or April 1, 2021, whichever is later

Reserve Bank of India (RBI): India's central bank, which controls the issue and supply of the Indian rupee

RBI was set up in 1935 under the Reserve Bank of India Act, 1934

Following India's independence on 15 August 1947, the RBI was nationalised on 1 January 1949

The general superintendence and direction of the RBI is entrusted with the 21-member central board of directors: the governor; four deputy governors; two finance ministry representatives; ten government-nominated directors; and four directors to represent local boards headquartered at Bombay, Calcutta, Madras and the capital New Delhi. Each of these local boards consists of five members

Functions: Overseeing monetary policy, issuing currency, managing foreign exchange, working as a bank for government 

RBI regulates commercial banks and non-banking finance companies working in India 

RBI plays an important part in the Development Strategy of the Government of India