Chapter III BOARD OF DIRECTORS AND MANAGEMENT

1. (1) The Board of Directors of the Institution shall consist of the following, namely:--
   • (a) a Chairperson, to be appointed by the Central Government in consultation with the Reserve Bank;
   • (b) a Managing Director, to be appointed by the Board, on the recommendations of the Bureau and subject to such procedure and clearances from such agencies, as may be determined by the Central Government;
   • (c) not more than three Deputy Managing Directors, each of whom shall be appointed by the Board, on the recommendations of the Bureau and subject to such procedure and clearances from such agencies, as may be determined by the Central Government;
   • (d) two directors, to be nominated by the Central Government, who shall be the officials of the Central Government;
   • (e) such number of directors not exceeding three, elected by shareholders in such manner as may be prescribed, such that a shareholder, other than the Central Government, holding ten per cent. or more of the total issued equity share capital may nominate one director;
   • (f) such number of independent directors not exceeding three or one-third of the total number of directors on the Board, whichever is higher, to be appointed by the Board on the recommendations of the Nomination and Remuneration Committee: Provided that if the percentage of holding of issued equity share capital with the shareholders does not permit election of three directors or until the assumption of charge by the directors elected by the shareholders, the Board may at any time co-opt such number of independent directors, not exceeding three, to be appointed by the Board on the recommendations of the Nomination and Remuneration Committee, who shall hold office until the assumption of charge by the directors elected by the shareholders and an equal number of such co-opted independent directors shall retire in the order of cooption: Provided further that at least one of the directors specified in clause (e) or in clause (f) shall be a woman.
2. (2) The Managing Director and Deputy Managing Directors shall be whole-time directors of the Board.
3. (3) No person who is a salaried officer or other employee of the Institution shall be appointed as a director of the Board except to the post of a Managing Director or a Deputy Managing Director.
4. (4) The Chairperson shall preside over the meetings of the Board.
5. (5) The terms and conditions of induction of independent directors to the Board under clause (f) of sub-section (1) shall be such as may be prescribed.
6. (6) The directors appointed under clauses (d) and (f) of sub-section (1) shall be deemed to be independent directors under the Companies Act, 2013 (18 of 2013), for the purpose of immunities available to independent directors.

1. (1) The general superintendence, direction and management of the affairs and business of the Institution shall vest in the Board which shall exercise all powers and do all acts and things which may be exercised or be done by the Institution.
2. (2) Subject to the provisions of this Act, the Board in discharging its functions shall act on business principles.

The Board may, by general or special order, delegate to any director or committee constituted under this Act or to any officer or other employee of the Institution, subject to such conditions and limitations, if any, as may be specified in the order, such of its powers and functions under this Act as it may deem necessary.

1. (1) The Chairperson, Managing Director, Deputy Managing Directors and other directors of the Board other than the directors nominated by the Central Government under clause (d) of sub-section (1) of section 6, shall hold office for such term, not exceeding five years, and shall be eligible for reappointment subject to an overall term not exceeding ten years: Provided that the Managing Director and Deputy Managing Directors shall not hold office as such after they have attained the age of sixty-five years and sixty-two years, respectively.
2. (2) Notwithstanding anything contained in sub-section (1), the Chairperson and directors nominated or appointed under sub-section (1) of section 6 shall hold office during the pleasure of the authority nominating or appointing them.
3. (3) The Chairperson and directors nominated by the Central Government or shareholders and independent directors shall receive such fees and reimbursements as may be prescribed: Provided that any fees and reimbursements payable under this sub-section shall not be linked with the profits of the Institution.
4. (4) The salaries and allowances payable to the Managing Director and Deputy Managing Directors shall be specified by regulations on the recommendations of the Nomination and Remuneration Committee guided by market standards.
5. (5) The term of office and other terms and conditions of service of, the Chairperson, Managing Director, Deputy Managing Directors and other directors of the Board other than the directors nominated by the Central Government under clause (d) of sub-section (1) of section 6, shall be such as may be prescribed.
6. (6) Notwithstanding anything contained in this Act, no fees shall be payable to any director who is an officer of the Central Government.

1. (1) The Central Government may remove from office any director who---
   • (a) is, or at any time has been, adjudged as insolvent; or
   • (b) has become physically or mentally incapable of acting as a director; or
   • (c) has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude; or
   • (d) has acquired such financial or other interest as is likely to affect prejudicially his functions as a director; or
   • (e) has, in the opinion of the Central Government, so abused his position as to render his continuance in office detrimental to the public interest; or
   • (f) has, for any reason, been removed or dismissed from the service of---
     • (i) the Government; or
     • (ii) any bank including the Reserve Bank or the State Bank of India; or
     • (iii) any public financial institution or State financial corporation; or
     • (iv) any other corporation owned or controlled by the Government.
2. (2) No such director shall be removed under clause (d) or clause (e) of sub-section (1) unless he has been given a reasonable opportunity of being heard in the matter.
3. (3) Any director who is elected or nominated as a Member of Parliament or of any State legislature, shall cease to be a director from the date of such election or nomination, as the case may be.
4. (4) The disqualifications or removal under this section shall not take effect---
   • (a) for thirty days from the date of the adjudication, sentence or order; or
   • (b) where any appeal or petition is preferred within thirty days against the adjudication, sentence or conviction resulting in the sentence or order, until the expiry of seven days from the date on which such appeal or petition is disposed of.

1. (1) Notwithstanding anything contained in section 10,--
   • (i) the Central Government may, after consulting the Reserve Bank, remove from office the Chairperson and appoint in his place another person to fill the vacancy;
   • (ii) the Board may, after consulting the Bureau, remove from office any director appointed under clause (b) or clause (c) or clause (f) of sub-section (1) of section 6 and appoint in his place another person to fill the vacancy;
   • (iii) the shareholders, other than the Central Government, may, by a resolution passed by majority, of the votes of such shareholders holding in the aggregate not less than one-half of the share capital held by all such shareholders, remove any director elected under clause (e) of sub-section (1) of section 6 and elect in his place another person to fill the vacancy: Provided that no person shall be removed from office under this sub-section unless such person has been given an opportunity of showing cause against such removal.
2. (2) Notwithstanding anything contained in sub-section (1), the Central Government shall, in consultation with the Reserve Bank, have the right to terminate the term of office of the Chairperson, Managing Director, Deputy Managing Directors or directors, as the case may be, at any time before the expiry of the term prescribed under sub-section (5) of section 9, by giving notice of not less than three months in writing or three months' salary and allowances in lieu of such notice.

1. (1) If a director--
   • (a) becomes subject to any of the disqualifications mentioned in section 10 or is removed under section 11; or
   • (b) is absent without leave of the Board for three or more consecutive meetings thereof, his seat shall thereupon become vacant.
2. (2) Any director may resign his office by giving notice thereof in writing to the Board and on such resignation being accepted by the Board, or, if such resignation is not accepted sooner, on the expiry of three months from the receipt thereof by the Board, such director shall be deemed to have vacated his office.

1. (1) The Board shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings, as may be specified by regulations.
2. (2) A meeting of the Board shall be held at least once in every calendar quarter and at least four such meetings shall be held every year.
3. (3) The Chairperson of the Board, or, if for any reason he is unable to attend any meeting, the Managing Director, or, in the event of both the Chairperson and the Managing Director being unable to attend a meeting, any other director nominated by the Chairperson in this behalf and in the absence of such nomination, any director elected by the directors present from among themselves at the meeting, shall preside at the meeting of the Board.
4. (4) All questions which come up before any meeting of the Board shall be decided by a majority of votes of the directors present and voting, and in the event of an equality of votes, the Chairperson, or, in his absence, the person presiding, shall have a second or casting vote.
5. (5) Save as provided in sub-section (4), every director shall have one vote.

1. (1) No act or proceeding of the Board or of any of its committee shall be questioned on the ground merely of the existence of any vacancy in, or defect in the constitution of, the Board or the committee, as the case may be.
2. (2) No act done by any person acting in good faith as a director of the Board or as a member of its committee shall become invalid merely on the ground that he was disqualified to be a director or that there was any other defect in his appointment.

1. (1) The Board shall constitute a Nomination and Remuneration Committee, a Risk Management Committee and an Audit Committee, each consisting of a minimum of three directors with independent directors forming a majority.
2. (2) The Board shall constitute an Executive Committee consisting of such number of directors as it may consider necessary.
3. (3) The Chairperson of the Institution shall not be a member of the Executive Committee and after the first year not be Chairperson of Audit Committee or the Nomination and Remuneration Committee.
4. (4) The Board may constitute such other committees as it may deem fit.
5. (5) The Executive Committee or any other committees constituted under this section shall meet at such times and places, observe such rules of procedure in regard to transaction of business at its meetings and shall perform such functions, as may be specified by regulations.

1. (1) Every director shall at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year, or whenever there is any change in the disclosures already made, then at the first Board meeting held after such change, disclose his concern or interest in any body corporate, which shall include shareholding, in such manner as may be prescribed.
2. (2) Every director who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into by the Institution--
   • (a) with a body corporate in which such director or such director in association with any other director, holds more than two per cent. shareholding of that body corporate, or is a promoter, manager, chief executive officer or trustee of that body corporate; or
   • (b) with a firm or other entity in which such director is a partner, owner or member, as the case may be, shall not participate in any meeting of the Board or of its committee in which such contract or arrangement is deliberated upon, or in any other deliberations or discussions regarding such contract or arrangement, and shall, in the case of such deliberations in a meeting of the Board or its committee, disclose the nature of his concern or interest to the Board or the committee, as the case may be: Provided that where any director who is not so concerned or interested at the time of entering into such contract or arrangement, shall, if he becomes concerned or interested after the contract or arrangement is entered into, disclose his concern or interest forthwith when he becomes concerned or interested, or at the first meeting of the Board held after he becomes so concerned or interested.
3. (3) A contract or arrangement entered into by the Institution without disclosure under sub-section (2) or with participation by a director who is concerned or interested in any way, whether directly or indirectly, in such contract or arrangement, shall be voidable at the option of the Institution.
4. (4) Such employees as the Board may specify as constituting the senior management of the Institution shall make disclosures to the Board relating to all material, financial and commercial transactions, in which they have personal interest that may have a potential conflict with the interest of the Institution, and the Board shall formulate a policy on such transactions, including any materiality threshold therefor, and shall review such policy at least once every three years. Explanation.--For the purposes of this sub-section, conflict of interest relates to dealing in the shares of the Institution or any of its subsidiaries or associate companies, commercial dealings with bodies in which the senior management individual or his relatives have shareholding, etc.
5. (5) If an individual who is a director contravenes the provisions of sub-section (1) or sub-section (2), or an employee referred to in sub-section (4) contravenes such provisions, such an individual or employee shall be liable to pay penalty of a sum of up to one lakh rupees.
6. (6) Without prejudice to anything contained in sub-section (5), it shall be open to the Institution to proceed against a director or any other employee who had entered into such contract or arrangement in contravention of the provisions of this section for recovery of any loss sustained by it as a result of such contract or arrangement. Explanation.--For the purposes of this section and section 19, the expression "body corporate" shall include a company, a body corporate as defined in clause (11) of section 2 of the Companies Act, 2013 (18 of 2013), a firm, a financial institution or a scheduled bank or a public sector enterprise established or constituted by or under any Central Act or State Act, and any other incorporated association of persons or body of individuals.