RBI proposes upper age limit of 70 yrs for bank CEOs, whole-time directors
The Reserve bank of India (RBI) has recently released a discussion paper on Governance of Commercial Banks in India for consultation of stakeholders. In the paper it has been proposed that the upper age limit for Chief Executive Officers (CEOs) and Whole Time Directors (WTDs) of banks should be 70 years and a maximum term of 10 years for those belonging to the promoter group. The objective of this proposal is to improve governance in the banking sector. The discussion paper also suggests that the chief executive officers and whole time directors belonging to the promoter group should pass on the managerial leadership to professionals after ten years. This has been suggested in view of 10 years as a sufficient time for the CEO or the WTD of a bank to stabilize its operations and spearhead the managerial leadership to a level of professional management. The suggestions have been made with a view to achieve the separation of ownership from management and also to imbibe a culture of professional management in the banking sector. The overarching objective of aligning the current regulatory framework with global best practices while being mindful of the context of domestic financial system has been placed forward by RBI as the core purpose of the exercise.
