Reserve Bank of India caps tenure of private bank CEOs at 15 years

The Reserve Bank of India on Monday capped both the tenure and age limit for senior management including that of chairmen in all private banks.
A security woman guards at the RBI headquarters in Mumbai. (File | PTI)
A security woman guards at the RBI headquarters in Mumbai. (File | PTI)

NEW DELHI: The Reserve Bank of India on Monday capped both the tenure and age limit for senior management including that of chairmen in all private banks. While the cap for non-executive directors, and chairman is set at 75 years, their tenure is fixed for 8 years. They can rejoin after 3 years, if found fit. 

Likewise, the posts of Managing Director (MD), Chief Executive Officer (CEO) as well as Whole Time Directors (WTD) are capped at not more than 15 years.  These new norms will be applicable for all private sector banks including small finance banks and wholly-owned subsidiaries of foreign banks. However, foreign banks with branches are excluded. 

Banks have to implement this by October, 1. The upper age limit is fixed at 70 years. Besides, MDs & CEOs or WTDs who have already completed 12 or 15 years by October 1, are allowed to complete their current term. The circular is an outcome of the discussion paper issued last June to review the framework for governance in commercial banks to address a few operative aspects. 

“It is clarified that the extant instructions on upper age limit for MD & CEO and WTDs in the private sector banks would continue and no person can continue as MD & CEO or WTD beyond the age of 70 years.Within the overall limit of 70 years, as part of their internal policy, individual banks’ Boards are free to prescribe a lower retirement age for the WTDs, including the MD & CEO. MD & CEO or WTD who is also a promoter/major shareholder, cannot hold these posts for more than 12 years. However, in extraordinary circumstances, at the sole discretion of the Reserve Bank such MD & CEO or WTDs may be allowed to continue up to 15 years, “ it noted. 

Individuals will be eligible for re-appointment as MD & CEO or WTD in the same bank, if considered necessary and desirable by the board, after a gap of three years, subject to meeting other conditions. During this cooling period, they shall not be appointed or associated with the bank or its group entities in any capacity, either directly or indirectly.

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