According to reports from Business Standard, a typical public sector bank board meeting follows a structured format where directors arrive at 11:00 am, with the board secretary ensuring quorum completion by 11:05 am. The meetings typically run for three hours, covering items such as confirmation of previous meeting minutes, action reports showing compliance status of board directions, and policy approvals. The meetings conclude with items covering NPAs, cyber incidents, HR matters, and subsidiary status updates, with most items noted rather than approved.
As reported by Business Standard, the RBI issued RBI (Commercial Banks – Governance) Directions, 2025 in November last year to establish a robust framework for PSBs, private sector banks and foreign banks. The framework aims to strengthen oversight, risk management, and accountability of bank boards. The RBI's April monetary policy has proposed three measures for promoting ease of doing business, with the first measure focusing on better utilisation of bank board time. The regulator has repeatedly flagged practices such as loan ever-greening, misreporting of stressed assets, and weak audit cultures as symptoms of board-level governance gaps.
According to Business Standard, the RBI's message emphasizes that directors should set the tone, ask hard questions, and make management accountable, instead of stepping into the shoes of whole-time directors for everyday decisions. The regulator has distilled board responsibility into four interlinked roles: monitoring the bank's risk profile, ensuring reliability of control systems, guaranteeing expert and ethical management, and protecting stakeholder interests. The board should shift attention from micro management to overseeing policy adherence, with shorter, better-curated agendas allowing deeper engagement on strategy, risk, conduct, and culture.
As reported by Business Standard, the updated framework allows boards to retain control over strategy, key policy approvals, and the definition and regular review of risk appetite. Boards are tasked with overseeing large exposures, related-party transactions, subsidiary governance, and the overall conduct and compliance framework. The idea is to move boards 'from approving loans to owning risk', from box-ticking to meaningful debate. The legal architecture under Section 9 of the Banking Companies Acts, 1970/1980 permits wide range of directors including employee, chartered accountant, shareholder, and non-official part-time directors, pushing PSB board sizes.
According to Business Standard, the aim is not to sideline boards but to ensure their involvement is relevant where it matters. The regulator wants boards to have the time and bandwidth to grapple with big-ticket items rather than rubber-stamp routine notes. The third umpire, RBI, is there to step in if required, with the board functioning as the umpire rather than a player on the field. The framework emphasizes that boards should not miss the woods for the trees, focusing on policy, risk appetite, and forward-looking strategy while management runs operations within approved frameworks. For years, many bank boards have drifted into operational minutiae—approving individual loans, vetting vendors, weighing in on promotions of executives—instead of setting up policies, defining risk appetite, and challenging strategy.
