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Private sector banks that have been hoping to get an extension for their chiefs after the age of 70 may be in for disappointment as the Reserve Bank of India is understood to be not amenable to the idea.
“There is a view that the current norms were formulated after much thought and discussion and have served the sector well.
“The RBI may not accept a proposal to extend the age limit beyond the current 70 years, especially as it could be seen to be a one-off exception,” said a person familiar with the development, noting that the retirement age for public sector banks remains 60 years.
The issue assumes significance given that the MDs and CEOs of two private sector lenders – IndusInd Bank and HDFC Bank – are due to retire next year.
IndusInd Bank MD and CEO Romesh Sobti will retire in March 2020, while Aditya Puri, who heads HDFC Bank, will retire in October next year when they turn 70.
Following this, they will not be eligible for re-appointment based on current RBI guidelines.
Market experts believe that the test case may be IndusInd Bank, and if the RBI agrees to the re-appointment of Sobti, then HDFC Bank could also send a similar proposal.
Sources said if at all the issue has to be revisited, it will be done with due process and as a policy decision, adding that as of now no concrete proposal has been submitted to the RBI on this issue. During the fourth quarter results conference of IndusInd Bank, Sobti had indicated that he would be willing to continue at the bank, but said it was up to the RBI to review the age norms.
He had also said the bank was working on a succession plan roadmap for the last four years and has been grooming candidates.
Meanwhile, HDFC Bank, in its annual report 2018-19, has said the Nomination and Remuneration Committee of the board would soon set up a search committee to scout for potential successors to Puri.
“With respect to the tenure of the current Managing Director ending in October 2020, the board will identify a successor and work to ensure that this is done in a manner that will allow appropriate time for an effective transition of responsibilities,” the annual report said.
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