RBI Update: According to the information, recently new instructions have been issued by the Reserve Bank of India for private sector banks. Some changes have been made by RBI in the way banks work. For other information related to this update,
New Delhi: Reserve Bank of India (RBI) has issued new instructions regarding private banks. RBI has given information about this on Wednesday. Reserve Bank has issued new rules regarding MD and CEO of banks.
According to the new rules, it is necessary to appoint two whole time directors in banks. RBI has issued these instructions to run the functioning of banks properly.
Apart from the festive season, many times there is disruption in work in banks. For this reason the Reserve Bank has taken this decision. Private banks and wholly-owned subsidiaries of foreign banks have been asked to ensure the presence of at least two whole-time directors, including the Managing Director (MD) and the Chief Executive Officer (CEO), on their boards of directors.
RBI issued guidelines-
RBI said in a circular that in view of the increasing complexity of the banking sector, it becomes essential for banks to form an effective senior management team to deal with the current and emerging challenges.
Will help in succession planning-
It said the establishment of such a team could help with the bank’s succession planning. This is all the more important in the backdrop of regulatory stipulations relating to tenure and upper age limit for MD and CEO posts.
It is necessary to have 2 full time directors-
The Reserve Bank asked banks to ensure that they have at least two whole-time directors, including the MD and CEO, on their boards to address issues and challenges.
However, the Board of Directors of the bank should decide the number of whole-time directors keeping in mind the operational size, business complexity and other relevant aspects.
These banks have got 4 months time-
According to the circular, banks which do not currently fulfill the minimum conditions in terms of these instructions are advised to submit proposals for appointment of whole-time directors within four months.
It said that banks whose organization rules do not have provisions related to the appointment of whole-time directors can first seek early approval from the RBI.
