Mumbai:
The Reserve
Bank of India (RBI) has asked banks to adopt the recommendations
of the consultative group on appointment of directors
on their boards.
The Dr Ganguly Group report, which was submitted to the RBI in
April 2002, suggested that banks must make disclosures to their
boards at regular intervals. They must detail the board on
exposures to related entities with respect to the lending and
investment in subsidiaries and the asset classification of such
lending and investment.
In a list of
recommendations made to the RBI after reviewing the supervisory
role of boards, public sector banks have been advised that in
order to improve information flow, boardroom proceedings must be
recorded. To this end, a summary of key observations made by the
directors can be submitted in the next board meeting.
Banks should also
consider appointing a qualified company secretary as the secretary
to the board and have a compliance officer (reporting to the
secretary to ensure compliance with various regulatory and
accounting requirements).
Private
sector banks have been asked to evolve appropriate systems
for ensuring fit and proper norms for directors, which
may include
calling for information by way of self-declaration, verification
reports from market, and the like.
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