RBI Limits Single Term Of Bank CEOs, Managing Directors To 15 Years

RBI said that chief executive officers and managing directors at Indian private-sector banks will be eligible to hold these posts for up to 15 years.

The Reserve Bank of India (RBI) said on Monday that chief executive officers (CEOs) and managing directors (MDs) at Indian private-sector banks will be eligible to hold these posts for up to 15 years, as it unveiled a series of rules on term limits. Analysts welcomed the new rules and said they may be extended to the shadow banking sector as well. "These are some learnings from the banking crisis that unfolded last year from the Yes bank case, so the RBI is putting these steps in place to ensure that such kind of issues don't arise in future," said Asutosh K Mishra, analyst at a domestic brokerage house, Ashika Stock Broking. In March 2020 the central bank rescued Yes Bank, then the country's fifth-largest private lender, as it reeled under a mountain of bad loans due to its exposure to shadow lenders and real estate companies. The central bank also said on Monday that a CEO, MD or whole-time director (WTD) who is a promoter or major shareholder of a bank as well will not be eligible to hold these posts for more than 12 years, with an extension of up to 15 years permitted at its sole discretion.