Upper age limit now 70 for pvt bank MDs, CEOs

Move clears doubt on Puri, Sobti's eligibility for re-appointments

The Reserve Bank of India (RBI) has allowed managing directors and chief executive officers of private banks (and any other whole-time director on the board) to hold office till the age of 70 (and not beyond).

The move will erase doubts on the eligibility of Aditya Puri (HDFC Bank’s MD) and Romesh Sobti (IndusInd Bank’s MD and CEO) for re-appointments.

So far, a maximum age of 70 was stipulated for appointment or re-appointment of part-time directors in banks. For whole-time directors, including the MD and CEO, no maximum age was specified and decisions were taken case by case.

Many believed the regulator was not in favour of appointing an individual beyond the age of 65 as CEO in a private bank. For instance, in 2013, IndusInd Bank’s board of directors approved the re-appointment of Sobti as MD & CEO for three years with effect from February 1, 2014. The move was also approved by the shareholders. But RBI permitted it for only one year. This, it was widely believed, was because he would turn 65 in March 2015.

WHO’S THE BOSS?

• Move to erase doubts on the eligibility of Aditya Puri (HDFC Bank MD ) and Romesh Sobti (IndusInd Bank MD & CEO)for re-appointments
• So far, a ceiling of 70 years was stipulated for appointment or re-appointment of part-time directors in banks
• For whole-time directors, including the managing director and CEO, no ceiling was specified and decisions were taken on case-to-case basis
• About  a month ago, Sobti had said RBI was working on a policy to decide the age bar of private bank CEOs

This view received further credence after the P J Nayak committee proposed a maximum age of 65 for bank CEOs. The committee, to review governance of boards of banks, had made the suggestion in its report to RBI this May.

Puri turns 65 next year. His current term ends on October 31, 2015. Sobti is CEO till January 31, 2015. About a month earlier, Sobti had said RBI was working on a policy regarding this issue and was going to offer clarity “sooner than later”.

“Within the overall limit of 70 years, individual bank boards are free to prescribe a lower retirement age for the whole-time directors, including the MD and CEO, as an internal policy,” RBI said on Tuesday.