As per the instruction of the Reserve Bank of India (RBI), private sector banks must have at least two full-time directors along with the managing director and CEO. Banks that don’t have two whole-time directors (WTDs) need to submit proposals within 4 months.
According to the RBI, a team of WTDs will help in addressing the issue of banking sectors and succession planning. The central bank has given banks the power to decide the number of WTDs based on operational size and business complexity.
Under the WTD criteria, the CEO and MD are considered whole-time directors. If the bank doesn’t have WTDs, they need to appoint or promote a senior banker as WTD. To address both current and new issues in the banking sector, it’s important to form a strong relationship with the senior management team, as per RBI.
The banks got the guidelines that the banks that don’t meet the criteria of at least 2 whole-time directors are advised to submit the proposal for the appointment of WTDs in a span of 4 months.
Banks may need necessary approvals from the RBI if they don’t have a permit to appoint the WTDs in their articles of association.