RBI would perform a purely regulatory role, and withdraw its representatives on bank boards – this will require legislative change. Over time, RBI should also empower boards more, for instance offering broad guidelines on compensation to boards but not requiring every top compensation package be approved.
Given strong oversight from the bank’s board, the CVC and CAG would get involved only in extraordinary situations where there is evidence of malfeasance, and not when legitimate business judgment has gone wrong. 6  BIS central bankers’ speeches  I have focused on the challenges public sector banks face meeting the new competitive environment, as well as some possible solutions.