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Governance gaps found in some banks
May 30, 2023
The Reserve Bank of India has found some gaps in governance at certain banks, governor Shaktikanta Das said on Monday.
These gaps have the potential to cause some degree of volatility in the banking sector, he said.
“While these gaps have been mitigated, it is necessary that Boards and the managements do not allow such gaps to creep in,” Das said during a speech.
The Governor said is the joint responsibility of the Chairman of the Board and the Directors both whole time as well as non-executive or part time Directors to ensure robust governance. It is of utmost importance that the Directors “keep themselves updated with material changes in the bank’s internal environment as well as the external factors that have a bearing on the bank,” he added.
Das reminded individual directors that they should not have any conflict of interest which may hamper their objectivity and independence.
He said that at times the RBI has noticed the dominance of CEOs in Board discussions and decision making. It has been seen in such cases that Boards are not asserting themselves, he added.
The RBI would not like this type of situation to develop, the Governor asserted.
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