The Reserve Bank of India (RBI) on Tuesday said proposals for appointment of a new MD & CEO/CEO at private sector banks should invariably contain a panel of at least two names in the order of preference. The proposals should be submitted to it at least four months before the expiry of the term of office of the present incumbent.

In the case of re-appointment of an MD & CEO/CEO in banks, the RBI said complete applications in the prescribed forms and ‘declaration and undertaking’ from candidate(s), along with the remarks of the nomination and remuneration committee, should be submitted to it at least six months before the expiry of the term of office of the incumbent.

The RBI has sought granular information such as the name of the candidate banker(s) with branch and account numbers; details of shareholding; and list of relatives, if any, who are connected with any bank, as part of the declaration and undertaking.

Further, it is also wants list of entities in which the candidate(s) hold interested/beneficial ownership; details of holdings in entities incorporated abroad.

Approval for appointment

The central bank is seeking an application (Form A) by banks, whereby they need to take its approval to an amendment of a provision relating to the appointment/re-appointment/ remuneration, etc, of MD & CEO or any other Director or termination of appointment of a Director.

Additionally, the RBI wants private sector banks to submit an application (Form B) for its approval to the appointment/re-appointment of MD & CEO/whole-time directors/CEO/part-time chairperson.

This move comes in the backdrop of the RBI (in consultation with Central government) superseding the board of directors of YES Bank on March 5, 2020 for a period of 30 days owing to serious deterioration in the financial position of the bank. The private sector bank now has a new board and new investors led by SBI, ICICI Bank and HDFC, who have collectively pumped in about ₹10,000 crore to revive its fortunes.

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