The Reserve Bank of India (RBI) wants a stronger board for banks in the country to improve their governance.
In a discussion paper on governance in commercial banks in India, the banking regulator has suggested that bank board should be empowered to set the culture and values of the organization.
“Improving the quality of governance in financial intermediaries is an important determinant of efficiency in allocation of resources, protection of depositors’ interest and maintaining financial stability,” RBI said.
There should be a minimum of six and maximum of 15 members in the Board of directors of a bank, with majority being independent directors, RBI said.
The RBI said directors should not be a 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.
“Further, in the overall interest of good governance, a management functionary who is not a promoter / major shareholder can be a WTD or CEO of a bank for 15 consecutive years. Thereafter, the individual shall be eligible for re-appointment as WTD or CEO only after the expiration of three years,” the discussion paper said.
