RBI’s big decision on private banks, will directly affect MD, CEO

RBI Guidelines for Private banks: Under the new rules of the Reserve Bank, the post of Managing Director, Chief Economic Officer (CEO) and Whole Time Director cannot hold a person for more than 15 years.

The Reserve Bank of India has issued a new rule regarding the Indian banking sector. RBI guidelines are related to banking governance. This guideline will be applicable to private banks, small finance banks, subsidiaries of foreign banks. If a foreign bank is running a branch in India, then this circular will not apply to it. Under the new rules of the Reserve Bank, the post of Managing Director, Chief Economic Officer (CEO) and Whole Time Director cannot hold a person for more than 15 years.

According to a report published in Mint, the Reserve Bank’s circular states that if an MD & CEO and WTD completes 15 years, then they will have to step down from their posts first. His reappointment will be possible only when the board of the bank decides in this regard. If the bank’s board also takes this decision, then the reappointment will take place after at least 3 years. Apart from this, there are many other conditions as well. During these three years, the person cannot remain directly or indirectly connected with the group entities of the bank.

The maximum age limit for MD and CEO is 70 years.

The maximum age limit for managing directors and CEOs of private banks has been retained at 70 years. However, the board of directors of the bank will be free to take a decision in this regard. Under the internal policy, the board of the bank can reduce the age limit for retirement. However, he will not have the right to do more than 70 years.

Can hold office till approved

If the Managing Director or Whole Time Director (WTD) is the promoter or major shareholder of the bank, then he cannot hold this post for more than 12 years. Under severe circumstances, his tenure can be extended up to 15 years. If the managing director or WTD of a private bank has already completed the term of 12 or 15 years, then he can continue in his post for approved term towards RBI.