Bank board meetings to focus on seven critical themes
MUMBAI, MAY 14:
In order to get boards of public sector banks to pay more attention to matters of strategic and financial importance, the RBI has replaced the ‘Calendar of Reviews’ with seven critical themes, including business strategy, financial reports and their integrity, risk, compliance, and customer protection, in board deliberations.
The other themes that bank boards need to focus on are: financial inclusion and human resources.
The themes were recommended by the PJ Nayak Committee to Review Governance of Boards of Banks in India,
Under business strategy, bank boards will deliberate on development of new products, competitiveness of individual businesses, and business reviews in relation to targets. The risk theme will dwell on policies concerning credit, operational, market, liquidity risks; and assessing the independence of the risk function.
The boards will take up detailed scrutiny of quarterly and annual financial results, NPA management and reported NPA and provisioning integrity.
Adherence to the RBI and SEBI norms, observations from the annual financial inspection by RBI and from the Long Form Audit Report, review of decisions in previous minutes of meetings, key decisions within subsidiaries, review of action taken reports, and appointments to board committees will be looked into under the compliance category.
The consumer protection theme will deal with mis-selling, particularly third-party products, laying down the appropriateness of products to different customer segments, and understanding the broad trends and concentration in the growth of customer grievances and their resolution.
The extant ‘calendar of reviews’ put up to the boards of public sector banks comprise reviews, including Funds Management, Position Report, Compliance Reporting, Slippage and Recovery of NPAs, and State of Preparedness in respect of major initiatives, that must be placed before the Board in every meeting.
Further, there is a review of developments as and when they take place and yearly reviews to be put up to the Board. In every Board meeting, separate time slot is allocated for taking up the strategy review.