- The Reserve Bank of India (RBI) has come out with new guidelines on ‘fit and proper’ criteria of elected directors in Public Sector Banks and said all these banks were required to constitute a nomination and remuneration committee consisting of a minimum of three non-executive directors from the board, out of which not less than one-half will be independent directors and should include at least one member from the risk management committee of the board.
- As per the guidelines, the non-executive chairperson of the bank may be appointed as a member of the committee but shall not chair such a committee.
- The RBI said that an elected director can be appointed for three years and could be re-elected but cannot hold office for than six years. It also said that the candidate should not be holding the position of a Member of Parliament or State Legislature or municipal corporation or municipality or other local bodies.
- Candidates engaged in stock broking, or a member of any other board of a bank or financial institution, connected with hire purchase, financing, money lending, investment, leasing and other para banking activities cannot be considered for the appointment.
- The RBI also said the candidate should not be acting as a partner of a chartered accountant’s firm which is currently engaged as a statutory central auditor of any nationalised bank or the State Bank of India.
