RBI

1. Corporate Governance in Banks - Appointment of Directors and Constitution of Committees of the Board
• Based on the feedback received on the Discussion Paper on Governance in Commercial Banks in India, a comprehensive review of the governance framework has been undertaken by RBI. Subsequently, RBI stated that a Master Direction on Governance will be issued in due course. In the interim, to address a few operative aspects, RBI through guideline dated April 26, 2021 prescribed instructions with regard to the following aspects;
• Chair and meetings of the board.
• Composition of Board Committees.
• Age, tenure and remuneration of directors.
• Appointment of the whole-time directors (WTDs).
2. Declaration of dividends by banks
• RBI through its circular dated April 22, 2021 on Declaration of dividends by banks reviewed the dividend declaration norms for the year ended March 31, 2021 and partially modified the instructions issued through its circular dated May 04, 2005. The banks are now allowed to pay dividend on equity shares from the profits for the financial year ended March 31, 2021, subject to the quantum of dividend being not more than 50% of the amount determined as per the dividend payout ratio prescribed in paragraph 4 of the said May 4, 2005 circular.
3. Issue of Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including Housing Finance Companies)
• RBI through its circular dated April 27, 2021 has issued guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) in supersession of all previous guidelines issued in this regard. The key changes are as under:
• Maximum tenure to appoint the SCAs/SAs for a continuous period reduced from four to three years;
• Entities with asset size of ` 150.00 bn and above, the statutory audit to be conducted under joint audit of a minimum of two audit firms;
• The audit of the Entity and any entity with large exposure to the Entity for the same reference year should also be explicitly factored in while assessing independence of the auditor. [Commercial Banks (excluding RRBs), UCBs and NBFCs including HFCs are referred to as the Entities];
• The time gap between any non-audit works by the SCAs/SAs for the Entities or any audit/non-audit works for its group entities should be at least one year, before or after its appointment as SCAs/SAs;

International:

1. Dubai - Dubai Financial Services Authority (DFSA)
• Dubai Financial Services Authority (DFSA) added the Recovery and Resolution (RAR) module in its rulebook on April 05, 2021 where Authorised Firms are required to prepare and submit a Recovery Plan within 2 months from April 12, 2021 and provide information to DFSA for the preparation of a Resolution Plan. The Recovery Plan should commensurate with the nature, complexity, interconnectedness, size and substitutability of the Authorised Firm’s DIFC operations, and set out the recovery measures the Authorised Firm can take. The Branch will be submitting the Recovery Plan to DFSA by May 31, 2021.