RBI tightens fit-and-proper criteria for directors on PSB boards

While the revised norms are applicable only to public sector banks, separate guidelines for private banks and non-banking financial companies may be in the offing

The Reserve Bank of India (RBI) has tightened the fit-and-proper criteria for directors on the boards of state-run banks, and said the Centre’s nominee director shall not be part of the nomination and remuneration committee (NRC). The revised criteria also, for the first time, laid down an exhaustive list for the disqualification of directors.

The terms with regard to the NRC and the manner of the appointment of directors have been aligned with the practice in private banks, the recommendations made by the Banks Board Bureau, and with the provisions in the Companies Act.

While the revised norms are applicable