DOS.No.BC.3/08.91.020/96

January 20, 1997

The Chief Executives,

All Indian Commercial banks

(other than SBI associates)

Dear Sir,

Public Sector Banks - Audit Committee of Board of Directors (ACB)

Please refer to our circular DOS.BC.14/Adm.919/16.13.100/95dated September 26, 1995 on the captioned subject. Some banks have raised certain issues relating to the constitution of ACB, rotation of non-official directors etc. Our clarifications in this regard are asunder :

i)    Rotation of Non-Official directors

Non-official directors should be rotated every two years. The bank should, however, ensure that atleast one non-official director is a Chartered Accountant. If the bank has only one non-official Chartered Accountant Director, he should not be rotated and should continue to be in the ACB.

ii)Association of Chairman/Managing Director/Chief Executive

It is not the intention that the Chairman/Managing Director/Chief Executive should be appointed in the Audit Committee of the Board.

Also Refer DBS.ARS.BC.01/08.91.020/2017-18dt 13-07-17

iii)A non-official director should be made the Chairman of the Audit Committee.

2.        The constitution of the ACB should be finalised on the above lines immediately if not already done.

Yours faithfully,
Sd/-

(A. Chandramouliswaran)
Chief General Manager