RBI Caps Tenure of Private Banks MD & CEO at 15 Years

The Reserve Bank of India (RBI) has capped the tenure of Managing Director and Chief Executive of commercial banks to 15 years. The same limit will also be applicable to whole-time directors (WTD). This means that the same incumbent cannot hold the post for more than 15 years.

The revised instructions will be applicable to all the Private Sector Banks including Small Finance Banks (SFBs) and wholly owned subsidiaries of Foreign Banks. However, it will not be applicable to foreign banks operating as branches in India.

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According to the new rules:

The MD & CEO or WTD who is also a promoter/ major shareholder, cannot hold these posts for more than 12 years.
The upper age limit for MD & CEO and WTDs in private banks has been retained at 70 years.
The instructions shall come into effect from the date of issue of this circular, that is April 26, 2021, however, in order to enable a smooth transition to the revised requirements, banks are permitted to comply with these instructions latest by October 01, 2021.

Important takeaways for all competitive exams: