The Reserve Bank of India on Wednesday has released draft guidelines aimed at strengthening governance standards across bank boards, placing greater accountability on board chair as they will be solely responsible for agendas post the HDFC Bank row..
Under the draft framework, the board chairperson will carry the primary responsibility for setting the agenda of board meetings. This move is aimed at ensuring that critical issues are prioritised and discussed in a structured and effective manner.
The RBI has emphasised that the ultimate responsibility for a bank's performance and conduct rests with its board. This underscores the regulator's intent to make boards more answerable for both financial outcomes and governance standards, rather than relying solely on executive management.
Banks will be required to clearly list and define matters that need to be placed before the board for approval. This is expected to reduce ambiguity in decision-making processes and ensure that key strategic and operational issues receive appropriate board-level scrutiny.
ALSO READ: RBI Holds Rates: Strategic Pause Amid Rising Global Uncertainty
To enable effective oversight, the draft norms mandate that boards must receive sufficient, timely and relevant information from management. This provision is aimed at empowering directors to make informed decisions and discharge their duties more effectively.
The RBI has also proposed that bank boards periodically review the list of matters that require board attention. This ensures that governance frameworks remain dynamic and aligned with evolving business and regulatory environments.
The draft guidelines are part of the RBI's broader push to enhance corporate governance in the banking sector, particularly in light of past lapses in risk management and board oversight.
HDFC Bank's Board Minutes Reviewed
The RBI on Wednesday said HDFC Bank's board meeting minutes and other records are studied as part of supervision exercise, and reiterated that the largest private sector lender has not been found wanting on ethics and governance.
It can be noted that the resignation letter did not mention any specific reason beyond incongruence on ethics and values, and the bank's other board members also said they were 'baffled' because Atanu Chakraborty did not cite any particular instances during their discussions either.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
