To take the governance process in banks a step further, we had some time back issued guidelines laying down transparent criteria for determining the ‘fit and proper’ status of owners and directors in private banks. Given our focus on a consultative approach to policy formulation, the document was posted on the RBI website for encouraging a debate on this issue.
Based on the feedback received, the draft is being reviewed before final guidelines can be issued to banks. The whole policy reform process has been designed to make the banking system more market oriented to enable efficient price discovery and to induce greater internal efficiency in the resource allocation process.