Please refer to Section-B of the Prudential Regulation G-1 regarding “Responsibilities of the Board of Directors” as amended from time to time.
2. In terms of Para 10 of the Regulation G-1 (B), the Board of Directors may form specialized committees to oversee the areas like audit, risk management, credit, recruitment, compensation etc. preferably comprising of ‘Non Executive’ Board members. However, as per the best international practices, the Audit Committee should exercise independent oversight of financial reporting, audit, internal controls etc. of the institution. Therefore, to ensure the independence of Audit function, it has been decided that from now on, the Audit Committee of a bank/DFI shall be chaired by an Independent Director. Accordingly, Para 10 of the Regulation G-1(B) has been amended as under with immediate effect:
“The Board of Directors (BoDs) may form specialized committees with well-defined objectives, authorities and tenure to share the work load and ensure effective oversight. These committees, preferably comprising of Non-Executive Board members, shall oversee areas like audit, risk management, credit, recruitment, compensation etc. Nevertheless, the Audit Committee of the Board shall 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 a regular basis”.
3. All other instructions on the subject shall remain the same.
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