Mumbai: The Reserve Bank of India (RBI) has set the term of the bank's MD and CEO in a major step towards reforms, which will come into force with immediate effect. In a circular issued to all commercial banks on Monday, RBI said that no one can hold the post of Managing Director (MD) and Chief Executive Officer (CEO) or Full-Time Director (WTD) for more than 15 to more days.

At the same time, MD and CEO or WTDs, which are also promoters or major shareholders, cannot hold these posts for more than 12 years. Banks will have to implement the instructions by October 1, 2021. RBI further said that additional instructions will continue on the upper age limit for MDs and CEOs or WTDs in private sector banks and no one can continue to hold the post of MD and CEO or WTD beyond the age of 70 years.

The boards of the private bank are free to fix the retirement age of WTD including MD and CEO within the age limit of 70 years. The change in norms could have a major impact on Uday Kotak, MD, and CEO of Kotak Mahindra Bank, who, as per these new norms, will not be eligible for another post at the top of the bank.

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