New Delhi: Indian banks are now required to have a minimum of two whole-time directors (WTDs) on their boards, including the managing director and chief executive officer (MD&CEO), as mandated by the Reserve Bank of India (RBI).

Central bank’s directive is for private banks

The RBI issued a statement emphasising the need for an effective senior management team in banks to address the growing complexity in the banking sector and to tackle emerging challenges. The central bank’s directive is for private banks and wholly-owned subsidiaries of foreign banks.

“Given the growing complexity of the banking sector, it becomes imperative to establish an effective senior management team in the banks to navigate ongoing and emerging challenges,” the RBI said in a statement.

The number of WTDs on each bank’s board will be determined by the board itself, taking into account factors such as the bank’s size of operations, business complexity, and other relevant aspects, RBI said.

The RBI said banks that currently do not meet this requirement are instructed to submit proposals for the appointment of WTDs within four months of this directive.

Additionally, banks without existing provisions for the appointment of WTDs in their Articles of Association are urged to promptly seek the necessary approvals to meet these requirements and comply with other applicable statutory and regulatory provisions.

“While ensuring compliance to the above instructions, careful consideration shall also be given to meet the requirements under other applicable statutory/regulatory provisions,” RBI added.