reserve bank of india: RBI directs banks to appoint whole time directors

The Reserve Bank of India directed banks to strengthen their senior management by hiring at least one whole-time director besides the managing director on the board.

The regulator has set a four-month deadline for submitting proposals for such appointments.

“Given the growing complexity of the banking sector, it becomes imperative to establish an effective senior management team in the banks to navigate ongoing and emerging challenges,” RBI said Wednesday in a communication to all private sector banks and wholly-owned subsidiaries of foreign banks.

It said that establishment of such a team may facilitate succession planning, given the regulatory stipulations in respect of tenure and upper age limit for MD and CEOs, which is fixed at 70 for private banks.

“To address these issues and challenges, banks are advised to ensure the presence of at least two whole time directors (WTD), including the MD &CEO on their boards. The number of WTDs shall be decided by the board of the bank by taking into account factors such as the size of operations, business complexity, and other relevant aspects,” RBI said.