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      Question

      Section 35B(1)(b) of the Banking Regulation Act, 1949

      requires the previous approval of the Reserve Bank for certain appointments. Which of the following appointments in a banking company shall have no effect unless made with the previous approval of the Reserve Bank?
      A Appointment of a branch manager by the managing director Correct Answer Incorrect Answer
      B Appointment of an internal auditor by the audit committee Correct Answer Incorrect Answer
      C Appointment of a statutory auditor by the shareholders at the AGM Correct Answer Incorrect Answer
      D Appointment of a non-executive independent director by minority shareholders Correct Answer Incorrect Answer
      E Appointment or re-appointment or termination of appointment of a chairman, managing or whole-time director, manager or chief executive officer Correct Answer Incorrect Answer

      Solution

      Section 35B(1)(b) provides that no appointment or re-appointment or termination of appointment of a chairman, a managing or whole-time director, manager or chief executive officer by whatever name called, shall have effect unless such appointment, re-appointment or termination of appointment is made with the previous approval of the Reserve Bank. Section 35B(1)(a) additionally requires RBI approval for amendments to provisions relating to the appointment or remuneration of such persons whether in the memorandum, articles, agreements or resolutions. The provision ensures that the most senior leadership positions in banking companies are subject to regulatory clearance, which is a cornerstone of fit-and-proper governance in Indian banking law.

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