**Summary:**
This Reserve Bank of India (RBI) circular, reference number RBI/2023-24/70 DOR.HGG.GOV.REC.4629/67.001/2023-24, dated October 25, 2023, addresses all Private Sector Banks and Wholly-Owned Subsidiaries of Foreign Banks (excluding Payment Banks and Local Area Banks) regarding the appointment of Whole-Time Directors (WTDs). The circular builds upon previous instructions on Corporate Governance in Banks, specifically paragraphs 10 and 11 of DOR.GOV.REC.829/67.001/2021-22 dated April 26, 2021.
Recognizing the increasing complexity of the banking sector and the need for effective senior management teams, the RBI now advises banks to ensure they have a minimum of two WTDs on their Boards, including the Managing Director and Chief Executive Officer (MD & CEO). The circular stipulates that the Board of each bank will determine the total number of WTDs, considering factors such as the size of operations, business complexity, and other relevant aspects.
Banks that do not currently meet this minimum requirement are directed to submit proposals for the appointment of WTDs under Section 35B(1)(b) of the Banking Regulation Act, 1949, within four months of the circular's issuance date. Banks lacking the necessary provisions in their Articles of Association for WTD appointments must first seek approval under Section 35B(1)(a) of the Act. Compliance with these instructions should also consider adherence to all other applicable statutory and regulatory provisions.
For further information, contact the Department of Regulation, Central Office, 12th-13th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001. Contact can be made via Tel No: 22661602, 22601000, Fax No: 022-2270 5691, or Email: cgmicdor@rbi.org.in. The circular is signed by Scenta Joy, Chief General Manager.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector.
Private Sector Banks: Banks in India that are not owned by the government.
Foreign Banks: Banks that are incorporated outside India.
Payment Banks: A type of bank in India that is allowed to accept deposits, offer payments and remittance services.
Local Area Banks: A type of bank in India operating in a specific geographical area.
Whole Time Directors: Directors of a bank who are employed full-time by the bank.
Banking Regulation Act, 1949: An act of the Parliament of India to regulate the banking companies in India.
Mumbai, Maharashtra: A city in Maharashtra where the Central Office of Department of Regulation, Reserve Bank of India is located.
भारतीय �रज़व र् बक�
RESERVE BANK OF INDIA
RBI/2023-24/70
DOR.HGG.GOV.REC.46/29.67.001/2023-24 October 25, 2023
All Private Sector Banks and
Wholly-Owned Subsidiaries of Foreign Banks
(excluding Payment Banks and Local Area Banks)
Madam / Dear Sir
Appointment of Whole-Time Director(s)
Please refer to paragraph 10 and 11 of our instructions DOR.GOV.
REC.8/29.67.001/2021-22 dated April 26, 2021 on ‘Corporate Governance in
Banks - Appointment of Directors and Constitution of Committees of the Board’.
2. 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. 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&CEO) positions.
3. To address these issues and challenges, banks are advised to ensure the
presence of at least two Whole Time Directors (WTDs), including the MD&CEO,
on their Boards. The number of WTDs shall be decided by the Board of the
bank by taking into account factors such as the size of operations, business
complexity, and other relevant aspects. In compliance to these instructions,
banks that currently do not meet the minimum requirement as above are
advised to submit their proposals for the appointment of WTD(s) under Section
35B(1)(b) of the Banking Regulation Act, 1949, within a period of four months
from the date of issuance of this circular. Those banks which do not already
have the enabling provisions regarding appointment of WTDs in their Articles
of Association may first seek necessary approvals under Section 35B(1)(a) of
__________________________________________________________________________________________
�व�नयमन �वभाग, क�द्र�य कायार्लय, 12वीं और 13वीं मंिज़ल, क�द्र�य कायार्लय भवन, शह�द भगत �सहं माग,र् फोटर्, मुंबई - 400001
Department of Regulation, Central Office, 12th & 13th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001
टेल�फोन/ Tel No: 22661602, 22601000 फैक्स/ Fax No: 022-2270 5691 ई-मैल / E-mail: cgmicdor@rbi.org.in
�हदं � आसान है, इसका प्रयोग बढ़ाइए-2-
the Act ibid, expeditiously, so as to be in a position to comply with the
requirements under these instructions. While ensuring compliance to the above
instructions, careful consideration shall also be given to meet the requirements
under other applicable statutory/regulatory provisions.
Yours faithfully
(Scenta Joy)
Chief General Manager