The Reserve Bank of India (RBI) will come up with a fresh set of fit-and -proper norms for the directors on the board of state-run and private banks, Business Standard reported.
The new terms of reference for appointing directors, which were last visited in November 2007, are expected to streamline appointments to such posts, taking into account the vocations from which directors are to be drawn and their eligibility, and the role of the nomination committee and the terms of the engagement, the report said.
The changes proposed will relook at various laws, including the two Bank Nationalisation Acts (passed in 1970 and 1980), the State Bank of India Act of 1955 and the Companies Act of 2013, the report added.
Prospective directors to the board of the companies have attracted the attention of market regulator Securities and Exchanges Board of India (Sebi), the Insurance Regulatory and Development Authority of India (Irdai) and the Ministry of Corporate Affairs (MCA) after many independent directors exited the board right after joining, citing 'personal reasons,' the report added.
Apart from this, a rise in faulty loans, conflicts of interest in credit decision-making and related party transactions and the role of independent directors on the board have also been of particular importance, the report added.
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