Consider the following statements with respect to the directions given by RBI regarding the whole time directors?

I. In a move to strengthen governance in private sector banks and wholly-owned subsidiaries of foreign banks, the Reserve Bank of India (RBI) has directed them to have at least two wholetime directors.

II. Lenders that do not meet the requirement will have to submit the names for the RBI’s approval within six months.

III. Payments banks, local area banks & small finance banks have been kept outside the purview of the RBI circular.

Which of the statements is/are not true?

Solution

In a move to strengthen governance in private sector banks and wholly-owned subsidiaries of foreign banks, the Reserve Bank of India (RBI) has directed them to have at least two whole time directors. Lenders that do not meet the requirement will have to submit the names for the RBI’s approval within four months. Banks need prior approval from the banking regulator for the appointment of whole time directors.  Some of the private sector lenders that do not have two whole time directors are IndusInd Bank, Tamil Nad Mercantile Bank, CSB Bank, DCB Bank, Dhanlaxmi Bank, City Union Bank, Karur Vysya Bank, and South Indian Bank. Among the wholly-owned subsidiaries of foreign banks, only SBM Bank has one whole time director. These banks have only their managing director and chief executive officer (MD & CEO) as whole time director.  While payments banks and local area banks have been kept outside the purview of the RBI circular, the norm will be applicable to small finance banks.