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April 5, 2002 | 1745 IST
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RBI panel submits report on bank board appointments

A consultative group constituted by the Reserve Bank of India has recommended establishment of appropriate due diligence procedures for appointment of directors on boards of private sector banks.

The group of directors of banks and financial institutions, in its report to the RBI, suggested appointment of one more whole-time director on the boards of large-sized nationalised banks and setting up of nomination committees of bank boards to recommend appointment of independent or non-executive directors, an RBI release said in Mumbai on Friday.

According to banking sources, this recommendation would mean that government would no longer be able to appoint directors on bank boards.

The group, under the chairmanship of A S Ganguly, director of RBI central board, also suggested building and creation of a pool of professional and talented people for board-level appointments in banks and maintenance of data for this purpose by RBI, it said.

The recommendations also focus on the role and responsibilities of independent and non-executive directors, their training and remuneration, commonality of bank directors and non-banking finance companies, information flow to and from the board and composition of financial committees of the board.

The RBI said that it was considering the recommendations of the group in consultations with the government.

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