Context

• The Reserve Bank of India (RBI) has mandated that the elected directors of public sector banks (PSBs) are to be appointed by the nomination and remuneration committee of the board of the respective banks.

‘fit and proper’ criteria:

• The RBI has come out with guidelines on ‘fit and proper’ criteria of elected directors in PSBs 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.
• “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.

Maximum tenure

• On the tenure, the RBI said an elected director can be appointed for three years and could be re-elected but cannot hold office for than six years. “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,” the RBI said.
• 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.
• Moreover, the RBI 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.

Source:TH