RBI tightens governance framework, redefines bank board responsibilities

RBI has tightened the governance framework for banks, with amendments effective October 1, redefining board responsibilities to focus on long-term strategic issues rather than operational approvals. The revised directions require bank boards to oversee risk management systems, exposures to related entities, and corporate governance compliance, while a single principle-based framework replaces multiple prior governance circulars. The move follows recent boardroom tensions, notably the abrupt resignation of HDFC Bank's former chairman Atanu Chakraborty citing misalignment with personal values and ethics.