‘Fit and proper’ criteria for directors of private banks- RBI Guidelines
RBI has asked private banks should undertake due diligence to determine the suitability of the person for appointment/continuing to hold appointment as a director on the board, as recommended by the Dr Ganguly Group report.
1. the banks in private sector should undertake a process of due diligence to determine the suitability of the person for appointment / continuing to hold appointment as a director on the Board, based upon qualification, expertise, track record, integrity and other fit and proper criteria. Banks should obtain necessary information and declaration from the proposed / existing directors for the purpose.
2. the process of due diligence should be undertaken by the banks in private sector at the time of appointment / renewal of appointment.
3. the boards of the banks in private sector should constitute Nomination Committees to scrutinize the declarations.
4. based on the information provided in the signed declaration, Nomination Committees should decide on the acceptance and may make references, where considered necessary to the appropriate authority / persons, to ensure their compliance with the requirements indicated.
5. banks should obtain annually a simple declaration that the information already provided has not undergone change and where there is any change, requisite details are furnished by the directors forthwith.
6. the board of the bank must ensure in public interest that nominated / elected directors execute the deeds of covenants as recommended by Dr. Ganguly Group every year.