RBI orders banks to designate directors on a full-time basis

26 Oct 2023 , 10:28 AM

In order to bolster senior management, banks are required by the Reserve Bank of India to appoint at least one full-time director to the board in addition to the managing director.

Proposals for these appointments must be submitted to the regulator within four months.

‘It becomes imperative to establish an effective senior management team in the banks to navigate ongoing and emerging challenges given the growing complexity of the banking sector,’ the Reserve Bank of India stated in a statement sent on Wednesday to all private sector banks and foreign banks’ wholly-owned subsidiaries.

It stated that, considering the legislative requirements around tenure and the upper age limit for MDs and CEOs, which is set at 70 for private banks, the creation of such a team may benefit in succession planning.

‘Banks are encouraged to make sure that at least two whole-time directors (WTD), including the MD and CEO, are present on their boards in order to handle these concerns and challenges. The size of operations, business complexity, and other pertinent considerations would be considered by the bank’s board in determining the number of WTDs, according to the RBI.

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