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The Reserve Bank of India has issued instructions with respect to corporate governance relating to the appointment of Directors and constitution of Board committees for private banks (including SFBs) and foreign banks. (Link)

* For MD & CEO and Whole-time Director (WTD), same individual shall not hold the post for more than 15 years but will be eligible for re-appointment after a minimum gap of 3 years – eligibility of re-appointment is a positive surprise.

* For MD & CEO or WTD who is also a promoter/major shareholder shall hold these posts for not more than 12 years; however, he/she can continue up to 15 years only at the sole discretion of the RBI. Eligibility of re-appointment is not applicable here.

* Upper age limit for MD & CEO and WTDs in private banks is capped at 70 years.

Also, for smooth transitions, current MDs & CEOs or WTDs shall be allowed to complete their current term already approved by the RBI.

Implications: Kotak Mahindra Bank, RBI (on 14th December 2020) has granted the approval for re-appointment of Mr. Uday Kotak as MD & CEO and Mr. Dipak Gupta as Joint MD for a period of 3 years, wef 1st January 2021 and they can continue till then. RBL Bank is yet to receive the approval from the RBI for re-appointment of Mr. Vishwavir Ahuja till June ’24. Eligibility (subject to Board/RBI approval beyond current reappointment tenure) for Mr. Natrajan at DCB Bank would be till April ’24, for Mr. Srinivasan at Federal Bank till Sep ’25 and for Dr. Kamakodi at CUBK till May ’26.

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