RBI to sensitise boards of pvt banks on liability of independent directors

Central bank to brief boards on governance standards; may tighten fit-and-proper criterion

The regulatory noose for private banks will be tightened, with the Reserve Bank of India (RBI) setting in motion an exercise to “sensitise” their boards on the liability of independent directors under the Prevention of Corruption Act (PCA), Companies Act, and the Criminal Procedure Code (CrPC) if they are found wanting in the discharge of their duties. The central bank may even tighten the fit-and-proper criterion for such directors.

The central bank’s move comes two years after a decision by the Supreme Court (SC) in 2016, which observed “officers” of private banks are “public servants” under the PCA. The immediate