RBI Mandates Two Whole-Time Directors for Indian Banks’ Boards
The Reserve Bank of India (RBI) has mandated that Indian banks must now include a minimum of two whole-time directors (WTDs) on their boards, including the managing director and chief executive officer (MD and CEO). This directive applies to private banks and wholly-owned subsidiaries of foreign banks.
The RBI emphasised the necessity for an efficient senior management team in banks to address the increasing complexity and emerging challenges in the banking sector. The number of WTDs on each bank’s board will be determined by the board itself, considering factors like the bank’s size, business complexity, and other relevant aspects.
Banks not currently meeting this requirement are instructed to submit proposals for the appointment of WTDs within four months. Banks lacking provisions for WTD appointments in their Articles of Association are encouraged to seek approvals to meet these requirements.
The RBI also stressed the importance of ensuring compliance with these instructions while carefully considering other relevant statutory and regulatory requirements.