Banking Regulation Act, 1949 · Section guide
Section 10: Prohibition of employment of managing agents and restrictions on certain forms of employment
Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026
Section 10 — Prohibition of employment of managing agents and restrictions on certain forms of employment. Eliminates the managing-agent model and restricts persons/remuneration arrangements. Inconsistent with prudent bank management; it also addresses disqualifying circumstances and excessive remuneration, with RBI scrutiny where the Act provides.
Official statute linkedProvision-specific anatomyPractical case + evidence file
Statutory structure and provision map
This map is a provision-specific explanation, not a substitute for the exact statutory text.
Core statutory rule
Eliminates the managing-agent model and restricts persons/remuneration arrangements inconsistent with prudent bank management.
Condition / limitation
it also addresses disqualifying circumstances and excessive remuneration, with RBI scrutiny where the Act provides.
Source and effective-date control
Apply the wording of Section 10 that was in force on the event date; use the official Act and any applicable commencement/amending instrument linked on this page.
Professional application
Map prohibited employment/remuneration arrangements, disqualifications and exceptions rather than a general HR checklist.
Evidence / working-paper checklist
- Section 10 evidence: board and committee composition register.
- Section 10 evidence: fit-and-proper / experience / conflict declarations.
- Section 10 evidence: appointment, removal or RBI approval correspondence.
- Section 10 evidence: minutes recording abstention, approval and effective dates.
Retain the event date and source version with the file so the conclusion remains reproducible after later amendments.
Common mistakes to avoid
- For Section 10, avoid counting titles instead of checking statutory experience/independence conditions.
- For Section 10, avoid implementing an appointment before a required RBI approval takes effect.
- For Section 10, avoid failing to record conflicts, abstentions or tenure calculations.
Related sections inside the Act
Use these links to read Section 10 in its statutory sequence, especially where the provision imports definitions, approvals, appeals, penalties or winding-up consequences from neighbouring sections.
Current-law source control
Source control: Section 10 is anchored to the official DFS consolidated text; later changes require separate Gazette verification.
Dated matters: verify any later Gazette, RBI direction or binding judgment affecting Section 10 on the event date.
Primary official sources
Disclaimer
This Finin2min page is an educational and professional reference. Banking regulation is fact-, entity- and date-sensitive. Verify the current Act, Gazette amendments and commencement notifications, applicable RBI Rules/directions and the transaction record before acting or filing.
Employment and remuneration control
Section 10 is not a general fit-and-proper checklist. It prohibits management by a managing agent and restricts specified employment and remuneration arrangements, including persons affected by insolvency, payment suspension, conviction involving moral turpitude and remuneration structures covered by the text.
| Control | Evidence |
|---|
| Role classification | Appointment terms, actual functions, authority and whether the arrangement resembles a prohibited managing-agent model. |
| Disqualification screen | Declarations and verified records addressing the statutory insolvency, payment and conviction grounds. |
| Commission or remuneration | Formula, profit linkage, guarantee/commission source, board approval and RBI review/approval where the Act requires it. |
| Change monitoring | Annual declaration, event notification, minutes, recusal and effective cessation or correction. |
- Define position
Map contractual title and actual management powers. - Run statutory checks
Test each prohibition against authenticated information. - Review pay structure
Separate salary, performance pay, profit commission and third-party arrangements. - Record decision
Retain board/RBI correspondence and continuing monitoring.
Example: A proposed executive receives a fixed salary plus a percentage of bank profits through a consultancy affiliate. Substance and payment source must be examined against section 10; splitting contracts does not avoid a statutory remuneration restriction.
Q&A: Is a clean police certificate the complete test? No. Can a board approval override section 10? No. Must every incentive receive RBI approval? Apply the exact category and current RBI framework; do not generalise from one remuneration component.
Official consolidated Banking Regulation Act | RBI governance directions register
Use the statutory wording, bank category and current RBI governance/remuneration direction for the appointment date.