Private and foreign banks are required to have at least two wholetime directors

Mumbai: The Reserve Bank of India (RBI) has made it mandatory to have at least two whole-time directors in the wholly-owned subsidiaries of private and foreign banks operating in the country as part of strengthening the administrative work.

Banks that do not comply with this standard will have to send the names to the RBI within four months for approval. Banks have to take prior permission of Reserve Bank for appointment of wholetime directors. RBI has also instructed banks to create senior management teams to meet the existing and emerging challenges in view of the growing complexities in the banking sector.

When there are regulatory norms, particularly with regard to the tenure and maximum age limit for the posts of Managing Director and Chief Executive Officer, the creation of such a team will be able to facilitate succession planning, the RBI notification said.

The number of wholetime directors to be decided by the board of the bank taking into consideration the size of their operations, business complexities etc. Banks which do not currently have at least two wholetime directors shall submit nomination proposals to the Reserve Bank within four months from the date of this notification to comply with this norm. Payments banks are exempted from this norm.