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Reserve Bank of India RBI/2021-22/24 DOR.GOV.REC.8/29.67.001/2021-22 April 26, 2021 To Commercial Banks (as per applicability) Madam/Sir, Corporate Governance in Banks Appointment of Directors and Constitution of Committees of the Board A Discussion Paper on Governance in Commercial Banks in India was issued by the Reserve Bank on June 11, 2020 to review the framework for governance in the commercial banks. Based on the feedback received, a comprehensive review of the framew
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FAQ :
These instructions apply to all Private Sector Banks, including Small Finance Banks (SFBs) and wholly owned subsidiaries of Foreign Banks. They also apply to the State Bank of India and Nationalised Banks to the extent they are not inconsistent with specific statutes.
The Chair of the board must be an independent director. Board meetings require a quorum of one-third of the total strength or three directors, whichever is higher. At least half of the directors attending board meetings must be independent directors.
The ACB must consist only of non-executive directors, with the board Chair not being a member. It requires a quorum of three members, and at least two-thirds of attending members must be independent directors. The ACB must meet quarterly, chaired by an independent director who does not chair any other committee.
The total tenure of an NED on a bank's board, continuously or otherwise, cannot exceed eight years. After completing eight years, re-appointment is only possible after a minimum gap of three years.
The fixed remuneration for an NED, excluding the Chair of the board, shall not exceed ₹20 lakh per annum, in addition to sitting fees and meeting expenses.
The post of MD & CEO or WTD cannot be held by the same person for more than 15 years. After this period, re-appointment is possible after a minimum gap of three years, subject to board approval and other conditions. For promoters/major shareholders, this limit is 12 years, extendable to 15 years at the RBI's discretion.
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Source : https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=12078