The Reserve Bank of India has issued final guidelines on the tenure of bank MDs, CEOs, or whole-time directors of private banks, small finance banks, and wholly-owned subsidiaries of foreign banks. Under the new guidelines, the post of MD and CEO of a private bank cannot be held by the same individual for more than 15 years in one go. While, in the case of a promoter MD/CEO, the tenure will be capped at 12 years. RBI has noted that under special circumstances and at its discretion, the term for promoter CEO may be extended up to 15 years. The new guidelines will impact the current heads of banks like Kotak Mahindra Bank, DCB Bank, City Union Bank, Federal Bank and RBL Bank, where they have been in the position for more than 10 years. However, for Kotak Mahindra Bank and City Union Bank, the term extension has already been done till 2024 and 2026, respectively. In the case of Kotak Mahindra Bank, Uday Kotak, the promoter MD and CEO, will not be eligible for reappointment once his term gets over. However, he will continue to remain a stakeholder in the bank. He was reappointed on 1 January 2021, for a period of 3 years. And its current Joint MD Dipak Gupta may not be eligible to succeed Kotak as the CEO as the 15-year cap applies for all whole-time directors as well. RBI has also stipulated that the upper age limit for MD and CEO and WTDs in the private sector banks would continue and no person can continue as MD and CEO or WTD beyond the age of 70 years. Banks are permitted to comply with these instructions latest by 1 October 2021.
