CONSTITUTION OF BANKS’ BOARD OF DIRECTORSAND THEIR RIGHTS
As per the relevant provisions of the Banking Regulation Act, at least fifty one percent of the total number of directors should be persons, who have special knowledge or practical experience, with respect of accountancy, agriculture and rural economy, banking, economics, finance, law, etc., The varied exposure and experience of different directors would be useful to the banking company. The directors of the banking company should not have a substantial interest. As per the provisions of the Banking Regulation Act, the term “substantial interest” would mean that the total shareholding of the said banking company by an individual or his or his spouse or minor child (singly) should not exceed Rs Five lakhs or ten per cent of the paid up capital of the banking company. The directors of a banking company should not hold office for more than eight years continuously. The board of the bank is constituted as per the provisions of the BR Act.