mumbai public sector banks psbs will not be able to manoeuvre people of their choice into board positions with the reserve bank of india rbi tightening fit and proper guidelines for the position of elected directors the central bank on friday came out with new master directions on fit and proper guidelines for elected directors on the board of psbs elected representatives such as members of parliament or state legislature or municipal corporation or local bodies cannot be shareholder representatives on bank boards read alsofinance companies may face banklike restrictionsafter forcing banks to recognise stressed loans as nonperforming assets npas last year the reserve bank of india rbi is talking tough to large finance companies on asset quality the rbi may place lending restrictions on some finance companies under a prompt corrective action pcathe rules explicitly bar board members of the rbi or any bank financial institution insurance company or bank holding company the new rule also requires that the candidate should not have served on the board of a bank financial institution or insurance company for six years individuals who are connected with hire purchasing financing money lending investment leasing or para banking activity are also not considered eligible as also are stock brokersshareholders of psu banks are required to elect two to three directors depending on the level of public shareholding although there are directors by investors these board members have typically been chartered accountants or other professionals with business contacts with the banks to keep out political appointees rbi requires all psbs to have a nomination and remuneration committee nrc with at least three nonexecutive directors of these half should be independent and should include at least one member from the risk management committee of the board to determine the fit and proper status of candidates for the board