The Reserve Bank of India(RBI) has put forward an upper age limit for the chief executive officers or CEOs and holding directors of banks. The limit is revised to be 70 years with a maximum term of 10 years for the people who are a part of the promoter group. This is decided with the aim to improve governance in the banking sector of the country. Beyond 70 years of age, nobody would be able to continue the post. This is a broad framework under which individual bank’s board is capable of forming an internal policy of age limit lower than this. RBI has invited suggestions and comments on the same proposition from several stakeholders, the last date for which is July 15 2020.
The discussion paper on the same was released by the Reserve Bank of India on Thursday. The paper read that the whole time so and directors need to pass on the duties and responsibilities of a senior position and managerial leadership to young professionals after 10 years. It is is important to limit the tenure of people holding these top managerial positions to ensure the principle of separation of ownership from management and to introduce capable and smooth governance structure in the banking sector.
A Managerial personnel who is not a part of the promoter group for a major shareholder of the bank can hold these positions for 15 consecutive years.