Banks must have diverse boards: RBI

Mumbai, Apr 4, 2023

The RBI has said that banks must have a diverse and independent board of directors, with a mix of executive and non-executive directors with certain minimum qualifications and experience.

This was announced by RBI deputy governor M Rajeshwar Rao in a speech at the Thrissur Management Association. In his speech, Rao said that while the RBI has prudential norms for banks, robust governance is crucial to financial stability. "Robust governance is the cornerstone of stability and prosperity of any organisation, safeguarding the integrity and ensuring that all decisions are taken in the best interest of stakeholders," said Rao.

He added that the oversight from the board must be supported by robust risk management, audit and compliance functions. "For modern economies, financial stability is not just a goal, it's a necessity - for when it falters, the ripple effects can bring down even the mightiest to their knees," said Rao.

[The Times of India]