75 years is set as the maximum age limit for chairman and non-executive directors
The Reserve Bank of India (RBI) on Monday fixed the tenure of Managing Director (MD), Chief Executive Officer (CEO) and whole-time director (WTD) in a private sector bank at 15 years and prescribed the maximum age of 70 years for such functionaries.
These directives form part of the instructions issued by the RBI with regard to the chair and meetings of the board, composition of certain committees of the board, age, tenure and remuneration of directors, and appointment of the WTDs on Monday.The RBI said it would come out with a Master Direction on Corporate Governance in banks in due course.
"Subject to the statutory approvals required from time to time, the post of the MD & CEO or WTD cannot be held by the same incumbent for more than 15 years. "Thereafter, the individual will be eligible for re-appointment as MD & CEO or WTD in the same bank, if considered necessary and desirable by the board, after a minimum gap of three years, subject to meeting other conditions," the RBI said.It added that during this three-year cooling period, the individual shall not be appointed or associated with the bank or its group entities in any capacity, either directly or indirectly.
With regard to the upper age limit for MD & CEO and WTDs in the private sector banks, the RBI said that no person can continue in such positions beyond the age of 70 years. The banks' boards, however, will be free to prescribe a lower retirement age for the WTDs, including the MD & CEO.The maximum age limit for chairman and non-executive directors has been fixed at 75 years.
The total tenure of an NED, continuously or otherwise, on the board of a bank, shall not exceed eight years. After completing eight years on the board, the person may be considered for re-appointment only after a minimum gap of three years. This directive will not preclude him/her from being appointed as a director in another bank subject to meeting the requirements.
The RBI directives also stipulate that the fixed remuneration for an NED, other than the chair of the board, shall not exceed Rs 20 lakh per annum.The board will be required to constitute a nomination and remuneration committee (NRC) made up of only NEDs. The NRC shall meet with a quorum of three members. At least half of the members attending the meeting of the NRC shall be independent directors, of which one shall be a member of the risk management committee of the board (RMCB).
The meetings of the NRC shall be chaired by an independent director. The chair of the board shall not chair the NRC. The meeting of NRC may be held as and when required, the RBI said. It further said the audit committee of the board (ACB) will comprise of only non-executive directors (NEDs). The board, it added, will also constitute an RMCB with a majority of NEDs.