The Reserve Bank of India may put a bar on promoters of private banks to become CEOs in order to avoid conflict of interests and other vested interests. This regimen may prevail at least in the new private banks. The RBI is also of the view that the firm that promotes the bank should be wholly owned by the promoter group and 50% of the directors of the non-operative financial company (NOFHC) should be independent directors. The promoters and CEOs of Kotak Mahindra and Yes Bank, are the same. Chairman and MD/CEO posts in all other private banks are already split and no promoter is MD/CEO in any of the other private banks. The RBI had set up a committee under the chairmanship of AS Ganguly in 2004-05 to study the issue of bifurcation of the post of chairman and MD in banks. Private sector banks started implementing this in 2007. In the case of IDFC and Bandhan, which have been given banking licenses, IDFC, with a wide range of shareholders, is a professionally-managed company and both executive chairman Rajiv Lall and CEO Vikram Limaye are professionals. IDFC is likely to have the same pattern in the bank. However, Bandhan is managed by Chandra Shekhar Ghosh, who is the promoter of the microfinance company.
