Please refer to the Regulation G-1 relating to Corporate Governance/Board of Directors and Management.

2. Based on the review of prudential regulations in line with international best practices, the following amendments have been made in Regulation G-1:

Section B. Responsibilities of the Board of Directors: (Para 10 of Section B is being replaced as under)

“10. To share the load of activities, the Board may form specialized committees with well-defined objectives, authorities and tenure. These committees, comprising of at least one non-executive Board member, shall oversee areas like Audit, Risk Management, Credit, and Recruitment, Remuneration & Nomination. The Chairman of the Board shall not be member of the aforementioned committees. Further, the Audit Committee of the Board shall invariably be chaired by an Independent Director. These committees of the Board should neither indulge in day-to-day affairs/operations of the bank nor enjoy any credit approval authority for transaction/limits. These committees should apprise the Board of their activities and achievements on regular basis.”

Section C. Management: (Para 2 of Section C is being replaced as under)

“2. The banks/DFIs during a calendar year may pay a reasonable and appropriate remuneration for attending the Board or its committee(s) meeting(s), to their non-executive directors and chairman. The scale of remuneration to be paid to the non-executive directors and chairman for attending the Board and/or committee meetings shall be approved by the shareholders on a pre or post facto basis in the Annual General Meeting (AGM). However, no such remuneration shall be paid to the executive directors except usual TA/DA as per bank’s/DFI’s standard rules and regulations. No consultancy or allied work will be awarded to the directors or to the firms/institutions/companies etc. in which they hold substantial interest. Further, the administrative expenses pertaining to the office, staff and security allocated to the Chairman of the Board should be determined rationally.”

3. The above amendments are applicable with immediate effect on all banks; however, DFls may adhere to the above instructions wherever feasible and appropriate.