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The meeting, the first leg of first-of-its-kind interactions with the boards of state-run banks, will now be followed by those of private banks in Mumbai on May 29.
The RBI’s circular of April 26, 2021, said in addition to sitting fees and expenses related to attending meetings of the board and its committees in accordance with extant statutory norms/practices, the bank might pay non-executive directors (NED) in the form of a fixed remuneration commensurate with an individual director’s responsibilities and demands on time and what was sufficient to attract qualified and competent individuals.
In the case of non-banks, according to the Companies Act (2013), the remuneration payable to directors who are neither managing director nor whole-time director shall not exceed 1 per cent of the net profit of the company concerned.
While Mint Road’s “Discussion paper on governance in commercial banks in India”, released on June 11, 2020, did not directly impact state-run banks because it had said “(except) in so far as what is prescribed is not inconsistent with provisions of specific statutes applicable to them or in case where the major shareholder/promoter viz., Government of India retains its instructions”, it is widely held that the authorities may over time make uniform board hygiene protocols across banks.
In Monday’s meeting, RBI Governor Shaktikanta Das “acknowledged the role played by the banks in supporting the economy and maintaining resilience along with improved financial performance in the face of several adverse shocks in recent times”.
He asked the directors of banks to further strengthen governance and assurance functions (risk management, compliance, and internal audit) so that the banks were able to identify and mitigate risks at an early stage. The governor also emphasised the need for banks to ensure continued financial and operational resilience. The conference included addresses by the deputy governors of the RBI and technical sessions on governance and assurance functions, credit risk, operational risk, IT/cyber risk and data analytics.
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