The government has raised the maximum tenure of the managing director (MD) and chief executive officer (CEO) of public sector banks (PSBs) to 10 years from five years, while retaining the superannuation age at 60.
The move will help the government retain talents, who rise through the ranks relatively quickly at state-run banks. It will also enable the PSBs to have relatively young leadership teams that will be in a better position to realise a longer-term vision.
The change in the rule also applies to the whole-time directors of central public-sector enterprises, a senior government official said. It will benefit those whole-time directors who have joined the board at a relatively young age of 45-50 years.
The Nationalised Banks (Management and Miscellaneous Provisions) Amendment Scheme, 2022, notified by the government, said: “A whole-time director, including the managing director, shall devote his whole time to the affairs of the nationalised bank and hold office for such initial term not exceeding five years and extendable up to a total period, including the initial term, not exceeding 10 years, as the central government may, after consultation with the Reserve Bank, specify and shall be eligible for reappointment.”
According to the earlier rules, the MD or the executive director of a public sector undertaking bank was eligible for a maximum tenure of 5 years or until they reach 60, whichever was earlier.
However, the Central government retains the right to terminate the term of a whole-time director, including the managing director, any time before the expiry of their tenure, by giving them a notice of not less than three months in writing, or three months’ salary and allowances in lieu of the notice.