By Gopika Gopakumar
MUMBAI, – The Reserve Bank of India on Wednesday proposed revised guidelines for bank boards, urging greater focus on policy matters over day-to-day operations.
In the draft rules, the RBI said bank boards would be responsible for overseeing risk management systems, strategy and key policies as well as monitoring exposure to related entities and investments in subsidiaries.
“The ultimate responsibility for the bank’s performance, conduct and control rests with the Board,” the central bank said, adding that some matters may be delegated to sub-committees or senior management.
The move follows recent tensions at HDFC Bank, the country’s largest private lender, whose chairman resigned abruptly, citing differences over “values and ethics.”
Reuters has previously reported, citing sources, that the chairman’s involvement in operational and management matters had led to internal friction with CEO Sashidhar Jagdishan.
The review of instructions, undertaken at the request of banks, will result in boards being able to divert more time to policy matters, leaving operational matters to the management, said RBI Governor Sanjay Malhotra in a monetary policy speech earlier on Wednesday.
The draft guidelines also mandate that boards ensure adherence to corporate governance standards and clearly define matters requiring their approval or periodic review.
The proposal streamlines RBI’s earlier themes, such as financial reporting and human resources, that guided matters placed before bank boards, replacing them with a principle-based approach to sharpen focus on strategy and risk governance.
The RBI has sought public comments on the draft guidelines by May 7.
(Reporting by Gopika Gopakumar and Nishit Navin; Editing by Sumana Nandy and Diti Pujara)
