New Delhi. Reserve Bank of India RBI Has taken a major step towards reform. RBI has issued guidelines on board chairman, meeting, composition of members of various committees of the board, age, tenure, salary of directors and appointments of WTDS. RBI has fixed a maximum tenure of 15 years for the Managing Director, CEO and Whole Time Director of the private sector bank of the country. It will be implemented with immediate effect. Apart from this, the age of these officials has also been fixed. The Reserve Bank on Monday issued a circular for all commercial banks stating that no one will hold the post of MD and Museo or WTD for more than 15 years. RBI has said that it will bring a master direction regarding corporate governance of banks in the coming time.
Tenure of MD and CEO fixed for 15 years
RBI said that the same person cannot hold the post of MD and CEO or full-time director for more than 15 years. The board of the bank can fix a retirement age of less than this for people in these positions. Also MDs and CEOs or WTDs, who are also promoters or major shareholders. You cannot keep these posts with you for more than 12 years. Banks will have to implement the instructions by October 1, 2021.
Maximum age set to 70 years
The central bank said that additional instructions on the upper age limit for MDs and CEOs or WTDs in private sector banks will continue. No person can continue as MD and CEO or WTD beyond the age of 70. Boards of private banks including MDs and CEOs are free to determine the retirement age of WT within the age limit of 70 years.
Uday Kotak may be affected
According to the new RBI guidelines, the change in norms could have a major impact on Uday Kotak, MD and CEO of Kotak Mahindra Bank. As per these new norms the bank will not be eligible for another position at the top.