The Reserve Bank of India has released a consultation paper, urging boards shift focus from routine administration to oversight.
In the proposed framework, boards would be expected to take charge of direction-setting and supervision, including risk arrangements, overall strategy and major internal rules.
They would also be required to keep watch on dealings with connected parties and on stakes held in subsidiaries.
The draft noted that the board remains accountable for a bank’s results, behaviour and control environment, while allowing tasks to be passed to board committees, sub-committees or management, provided reporting lines are set.
The central bank’s proposal follows a period of strain at HDFC Bank, where the chair stepped down suddenly, pointing to differences over “values and ethics”.
Earlier, Reuters reported, citing sources, that the chair’s participation in operational decisions contributed to tension with chief executive Sashidhar Jagdishan.
RBI Governor Sanjay Malhotra said, in remarks alongside the monetary policy announcement, that the exercise was initiated after banks asked for a review.
He said the changes are intended to free boards to concentrate on policy topics while executives handle day-to-day running.
The draft also instructs boards to ensure corporate governance requirements are met and to spell out which issues must come to the board for approval or for regular review.
It places responsibility for setting meeting agendas primarily with the board’s chair.
Boards would need to define what information they require from management, how detailed it should be and how often it should be provided.
While boards may rely on management reporting, they may seek outside assessments where needed.
The document adds that boards should regularly reassess what comes before them, what is delegated, and meeting processes such as agenda circulation timelines, the adequacy of supporting papers and the time reserved for key items.
Public comments on the draft are open until 7 May.
