The Reserve Bank of India (RBI) has been risk-averse this year in giving extensions to the management of private banks due to the COVID-19 pandemic situation in the country.
Except for Federal Bank, the central bank has not given a full extension to the terms of management officials as sought by the boards of other banks.
For instance, DCB Bank sought a three-year extension for their current MD & CEO Murali, but his term was extended only by a year. RBL Bank had also sought three years’ extension for Mr. V Ahuja as MD & CEO of the bank, however, his term was also extended by only a year.
Bandhan Bank, on the other hand, had sought an extended term of five years for its founder and MD, C S Ghosh, but an extension of only three years was granted. However, the Federal Bank’s board sought three years’ extension for S Srinivasan, and the same was approved.
RBI had recently capped the tenure of private bank’s MD and CEO for 15 years for non-promoters and at 12 years for promoters or major shareholder MD and CEOs.
According to RBI’s guidelines for private banks, after the completion of their term, MDs and CEOs or whole-time directors will be eligible for re-appointment in the same bank after a minimum gap of three years. During the cooling-off period, the person should not be associated with the bank or its group entities in any capacity, either directly or indirectly.
The rules apply to private banks, small finance banks, and wholly-owned subsidiaries of foreign banks. The upper age limit for MDs, CEOs, and whole-time directors is 70 years.
(Edited by : Kanishka Sarkar)
First Published: IST