The Indian Banks’ Association (IBA) has communicated certain concerns relating to the Reserve Bank of India (RBI) Code on Corporate Governance to the Banking Regulator RBI. Some of the major views conveyed by IBA has been explained as follows:

1. The position of the Chief Executive Officer (CEO) of the company will be diluted as all the key committees of the board of a bank such as Audit Committee, Nomination and Remuneration Committee and Risk Management Committee will be required to have only non-executive directors. This will undermine the role of the Managing Director or the CEO of the company, who is an executive director, as he will not be in a position to contribute effectively in the management of the company. So, the key officials will report to the Board-Level Committees, and not to CEOs.


2. Another major area of concern is that the capital raising ability of the bank may be affected after the pandemic because of the restriction on offering board seats to investors who collectively hold more than 20% shares.


3. Further, the Independent Directors have also expressed to the Chairmen and CEOs that they have to reconsider their board positions.


4. Also, the promoter CEOs and non-promoter CEOs will have to move on after completion of 10 years and 15 years, respectively.


5. Lastly, some of the large institutional investors are seeking legal opinion on the implications of the draft governance code.

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