Important Facts For Prelims
Fit and Proper Regime
- 03 Aug 2019
- 1 min read
The Reserve Bank of India (RBI) has notified guidelines on Fit and Proper criteria for elected directors on the boards of Public Sector Banks (PSB).
- The Reserve Bank of India (RBI) has mandated that the elected directors of public sector banks (PSBs) are to be appointed by the Nomination and Remuneration Committee (NRC) of the board of the respective banks.
- Under Fit and Proper criteria, RBI has mandated all the banks to constitute a Nomination and Remuneration Committee (NRC) consisting of a minimum of three non-executive directors from amongst the board of directors.
- Of these non-executive directors, not less than one-half shall be independent directors and should include at least one member from the Risk Management Committee of the board.
- Fit and proper regime is intended to keep centre’s nominated directors away from the PSB board and ensure minimum political intervention.
- Members of Parliament, state legislatures, and local governments not eligible to be members of PSB boards
