RBI turns down Federal Bank MD & CEO extension request for one year

Bank need to submit fresh proposal of 2 candidates in order of preference

In a surprising move, the Reserve Bank of India has turned down a proposal from Federal Bank seeking an extension of its MD & CEO Shyam Srinivasan for one year.

Srinivasan, who took charge of the Aluva-based private sector lender in 2010, was eligible to continue for one more year. According to RBI norms, a CEO can continue in a bank for 15 years, in case the person is not a promoter. His current term expires on September 22 this year.

“This request [extension for one year] was made in the context of the Reserve Bank of India’s permissible limit of 15 years on the term of an incumbent MD & CEO. (Mr. Srinivasan has been the bank’s MD & CEO since 2010),” Federal Bank informed the exchanges on Friday.

In response to Federal Bank’s request for Srinivasan’s extension as CEO, the regulator asked the bank to submit fresh proposals containing at least two names, in order of preference, and indicate the likely tenure and the longer-term requirement of the bank.

Federal Bank had made the application for Srinivasan’s extension on October 6, 2023. The RBI response was received on January 4.

“On January 4, 2024, the bank received the attached communication from the Reserve Bank of India … At its meeting on January 5, 2024, the bank’s board of directors has taken the Reserve Bank of India’s letter on record and will proceed accordingly,” the lender said in the exchange filing.

An alumnus of the Indian Institute of Management-Kolkata, Srinivasan was instrumental in increasing the presence and visibility of the bank at the national level. He was earlier with British lender Standard Chartered Bank, which he joined in 2008 as the country head of consumer banking.