The Reserve Bank of India on 9 September 2014 decided to fix the upper age limit at 70 years for Managing Directors (M.D) and Chief Executive Officers (CEO) in private sector banks.
As per the provisions of the Companies Act, 2013 under Section 196(3), it prescribed that no company shall appoint or continue the employment of any person as managing director, whole-time director or manager who is below the age of 21 years or has attained the age of 70 years.
However, individual bank’s boards are free to prescribe a lower retirement age for WTDs, including MD & CEO, as an internal policy.
Earlier, no maximum age was specified and decisions were taken case by case.
The P J Nayak committee recommended a maximum age of 65 for private bank CEOs. The committee was set up to review governance of boards of banks. The committee had submitted its report in May 2014.
The issue emerged when the board of Induslnd Bank cleared the extension of tenure of Sobti by another three years. Sobti is M.D. and CEO of Induslnd Bank.
However, the RBI allowed only a year's extension. The move triggered speculation that the RBI wanted to fix the retirement age at 65.
The issue of retirement applied only to private banks as all public sector employees have a fixed retirement age of 60 years. In banking, the only exceptions are RBI deputy governors who have a maximum age limit of 62 years and the office of governor where the age limit is 65.
When: 9 September 2014