India sets out proposals for tighter governance at banks

NEW DELHI (Reuters) - The Reserve Bank of India (RBI) proposed on Thursday stricter governance rules for commercial banks, following a series of financial and governance problems at lenders in recent months.

Reuters June 12, 2020 00:05:14 IST
India sets out proposals for tighter governance at banks

India sets out proposals for tighter governance at banks

NEW DELHI (Reuters) - The Reserve Bank of India (RBI) proposed on Thursday stricter governance rules for commercial banks, following a series of financial and governance problems at lenders in recent months.

The central bank's proposal includes limiting the length of time a major shareholder can serve as CEO to 10 years; setting clear divisions of responsibilities between a bank's board and management; and improving the supervisory oversight of senior management.

In a 74-page document drawn up for a public consultation on the plan, the RBI said the objective of tougher guidelines was to "align the current regulatory framework with global best practices while being mindful of the context of (the) domestic financial system."

In the past six months the RBI has stepped in to take control of three major financial institutions following financial problems.

Dewan Housing Finance Corp, one of the country's biggest housing finance companies was rescued as it owed creditors billions of dollars, and the RBI took control of Punjab & Maharashtra Co-operative Bank after the central bank said it found irregularities including under-reporting of bad loans.

In March it also rescued Yes Bank, then the country's fifth-largest private lender, as it reeled under a mountain of bad loans due to its exposure to troubled shadow lenders and real estate companies.

"Recent events in a dynamic and rapidly evolving financial landscape have led to increasing scrutiny of the role of promoter(s), major shareholder(s) and senior management vis-a-vis the role of a board," the RBI said.

(Reporting by Neha Arora in New Delhi, Swati Bhat and Nupur Anand in Mumbai; Editing by Susan Fenton)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.