RBI New Rules: The central bank has stated in its latest corporate governance rules that no person can remain a non-executive director after the age of 75 years. This rule will not be applicable to government and foreign banks.
- No person can be the CEO of a bank for more than 15 years.
- A person cannot remain a non-executive director after the age of 75 years.
- The RBI also fixed the tenure of promoter shareholder Bank Chiefs for 12 years.
- Uday Kotak is MD for 17 years, as per new rules he is not eligible for reappointment
NEW DELHI:
The Reserve Bank of India (Reserve Bank of India) is a person, according to the new rules for more than 15 years can no longer CEO of a bank. This could be a setback for Kotak Mahindra Bank as it will not lead to the bank’s founder CEO Uday Kotak next term. The central bank in its latest Corporate Governance Rules states that no person can remain a non-executive director after the age of 75 years. This rule will not be applicable to government and foreign banks.
RBI states that no person can remain MD & CEO or Whole Time Director for more than 15 years. The central bank states that the person will be considered eligible for reappointment in the same bank after a minimum interval of three years, provided the board deems it necessary and fulfills other conditions. Such a person will not be directly or indirectly involved in banks or group companies during the cooling period of three years.
What are the new rules
The RBI also fixed the tenure of promoter shareholder Bank Chiefs for 12 years. This can be extended for 3 years at the discretion of the central bank. Uday Kotak, the founder MD of Kotak Mahindra Bank, was reappointed by RBI for 3 years. His term has started from January 2021. He is the MD of Kotak Mahindra Bank for 17 years. According to the new rule, he is not eligible for reappointment.
RBI has also made it clear that the heads of private sector banks should not be more than 70 years of age. However, the central bank has also said that the bank boards are free to fix the lower retirement age of such persons. According to the new rules, the upper age of non-executive directors cannot exceed 75 years. They also include the bank chairman. According to the central bank, no non-executive director can remain on the board for more than 8 years.
