RBI directs Private Banks to have at least 2 Whole Time Directors

The Reserve Bank of India (RBI) has ordered private banks and wholly-owned subsidiaries of foreign banks to have at least two Whole Time Directors (WTDs), including the MD and CEO, on their boards to allow succession planning. Given the increased complexity of the banking sector, the RBI stated in a circular that it is critical to develop an effective senior management team to tackle the present and new problems.

“Establishment of such a team may also facilitate succession planning, especially in the background of the regulatory stipulations in respect of tenure and upper age limit for Managing Director and Chief Executive Officer (MD and CEO) positions,” according to the report.

To address concerns and challenges, the RBI requested that banks have at least two WTDs on their boards, including the MD and CEO.

The number of WTDs should be determined by the bank’s board of directors, who should consider criteria such as the size of operations, business complexity, and other relevant factors.

“In compliance to these directions, banks that currently do not meet the minimum requirement…are advised to submit their proposals for the appointment of Whole Time Director(s)… within a period of four months,” the circular added.

It further stated that banks that do not currently have enabling provisions for the appointment of WTDs in their Articles of Association should obtain relevant clearances from the RBI as soon as possible.

For Official Circular Download PDF Given Below: