RBI sets up panel to review governance of banks in India
20 January 2014
The Reserve Bank of India (RBI) has constituted an expert committee to review governance of boards of banks in India.
The committee, headed by P J Nayak, former chairman and CEO of Axis Bank, will review the regulatory compliance requirements of banks' boards and recommend measures to rationalise and enhance regulatory norms.
The committee will examine the working of banks' boards, including whether adequate time is devoted to issues of strategy, growth, governance and risk management besides reviewing central bank regulatory guidelines on bank ownership, ownership concentration and representation in the board.
The committee will analyse the representation on banks' boards to see whether the boards have the appropriate mix of capabilities and the necessary independence to govern the institution, and to investigate possible conflicts of interest in board representation, including among owner representatives and regulators.
In this regard, the panel will assess and review the 'fit and proper' criteria for all categories of directors of banks, including tenor of directorship and examine board compensation guidelines, and any other issue relevant to the functioning of banks' boards and the governance they exercise.
The other members of the panel include whole time SEBI member S Raman, chairperson and managing director of Allahabad Bank Shubhalakshmi Panse, former SEBI executive director Pratip Kar, McKinsey & Company director Joydeep Sengupta, Bain & Company India Pvt Ltd partner Harsh Vardhan, J Sagar Associates' partner Somasekhar Sundaresan and assistant professor at Indian School of Business Krishnamurthy Subramanian.
The committee is expected to submit its report within three months from the date of its first meeting.