The new rules will be applicable from October 1 this year, the central bank said in a notification.
RBI said the new set of rules adopts a principles-based approach that focuses on giving bank boards the freedom to formulate their agendas based on each bank’s specific priorities.
However, it was quick to add that board oversight on critical areas like risk, compliance, financial performance, and customer protection continues.
As per the amended rules, a bank board may decide on a mechanism for implementing decisions taken at meetings and did not accept the suggestions seeking a continuation of the ‘action taken report‘ mechanism.
The RBI has done away with the requirement to define materiality based on stakeholder feedback. It is expected that the entire board would be consulted for setting the agenda of the meeting; however, the primary responsibility for the same should rest with the chairperson, as it was made clear.