The Reserve Bank of India revised norms for appointing directors on the boards of public sector banks, making it so that government-appointed directors are banned from the nomination and remuneration committees of the respective banks.

The central bank banned nominee directors and shareholder directors from nomination and remuneration committees, which determine the "fit and proper" status of those elected to be directors. A committee will consist of a minimum of three nonexecutive directors, out of which not less than one-half should be an independent director and should include at least one member from the risk management committee of the board.

The central bank also laid out a detailed list for the disqualification of directors. The revised criteria said the potential director should not be a member of the board of any bank, the central bank or a financial institution. A person connected with financing, money lending, investment and other banking activities shall not be considered for appointment as director. However, investors of such entities may be appointed as director so long as they do not have any managerial control in them.

A director candidate should not have served as a director in the past on any board of any bank for six years. A candidate should also not be engaging in stock broking or a member of the Parliament, state legislature or other local bodies.

The RBI also banned a partner of a chartered accountant firm which is engaged as statutory central auditor of any nationalized bank from becoming a director candidate.