Previously, the eligibility criteria for the MD or any executive director of a public sector undertaking (PSU) bank was a maximum tenure of five years or 60 years, whichever was earlier.
The government through a notification dated 17 November 2022, has extended the term for the appointment of CEO (Chief Executive Officer) and MD (Managing Director) of public sector banks to 10 years, from the earlier 5 years, subject to superannuation age of 60 years. This move will help the government to retain the best talent in the banking sector, suggest media report.
Previously, the eligibility criteria for the MD or any executive director of a public sector undertaking (PSU) bank was a maximum tenure of five years or 60 years, whichever was earlier. The change is also applicable to the whole-time directors of all Central Public Sector Enterprises (CPSEs).
The notification said “A whole-time Director, including the Managing Director, shall devote his whole-time to the affairs of the nationalised bank and shall hold office for such initial term not exceeding five years and extendable up to a total period, including the initial term, not exceeding ten years, as the Central Government may, after consultation with the Reserve Bank, specify and shall be eligible for re-appointment.”
“This Scheme may be called the Nationalised Banks (Management and Miscellaneous Provisions) Amendment Scheme, 2022,” it added.
The central government holds right to terminate the term of office of a whole-time director, along with the managing director, any time before the expiry of the term mentioned by serving a three-month notice in writing or giving three months’ salary and allowances in lieu of notice.
The government’s decision would help banks to retain the talent who rise to the ladder of whole-time directors at early age of 45 to 50 years.
At present, there are many young age whole-time directors of PSU banks who entered the board. This amendment would benefit them.