RBI limits tenure of bank CEOs, MDs to 15 years, rule to be effective from October 1

The Reserve Bank of India has issued guidelines to limit the tenure of commercial bank CEOs and MDs to 15 years. The decision was part of its effort to improve corporate governance at commercial banks.

The Reserve Bank of India (RBI) said on Monday chief executive officers and managing directors 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 doesn't arise in future," said Asutosh K Mishra, analyst at a domestic brokerage house, Ashika Stock Broking.