The second rule is the appointment of the heads of public sector banks and it is implemented by the government. The head of a public sector bank is elected for a maximum term of 3 years or may remain in office till the age of 60 years.
Reserve Bank of India
The Reserve Bank of India (RBI) on Friday issued a notification regarding the rules for the appointment of heads of urban co-operative banks (UCBs) and whole-time directors (WTDs) of private banks. In the notification, the Reserve Bank has explained in detail how the appointments of head of urban cooperative banks and whole-time directors of private banks will be done and their tenure will be for how many years.
According to the notification, the tenure of the Managing Director (MD) or Whole-time Director cannot exceed 5 years at a time. Their first appointment will have a minimum tenure of 3 years. If these officers are removed or terminated before the term of service, then its rule is different. The board will review the work of MD and WTD every year. On that basis, the extension of the tenure will be considered. According to the Reserve Bank, no one officer can hold the post of MD or WTD for more than 15 years in his entire service.
how many years the tenure will be
The second rule is the appointment of the heads of public sector banks and it is implemented by the government. The head of a public sector bank is elected for a maximum term of 3 years or may remain in office till the age of 60 years. If an office bearer is made the head of a government bank at the age of 59, then he will remain in office for one year. The MD-CEO of a private bank is appointed by the board of that bank. For this, permission has to be taken from the Reserve Bank. The head of a private bank can continue in the post till the age of 70 years.
How the person will be made MD
Urban Co-operative Banks will have to ensure that the person being appointed as MD is ‘fit and proper’. According to the RBI notification, the MD will have to work under the control of the Board of Directors, as per its guidelines and under full supervision. The person who will be appointed as MD, his age should not be less than 35 years and not more than 70 years. The board of the bank can suggest ways to keep the retirement age low.
The UCB will have to form a Nomination and Remuneration Committee (NRC) consisting of three directors from the board. One of these members will be declared as the chairman of NRC. All the three members of NRC will have to be present in every meeting. If any member of the NRC is absent, the board will nominate another director who will complete the quorum of the meeting. According to the RBI, while preparing the NRC, the board will also decide the tenure of its members.
what will be the qualification
The person who is being made MD or Wholetime Director should be eligible for that job. Preferably he should be a graduate. Also should have qualification of Banking, Co-operative Banking, Chartered or Cost Accountant, MBA (Finance) or Post Graduate in any discipline. That person should have at least 8 years of experience in the banking sector at the middle or senior management level. This also includes work experience in UCBs, Non-Banking Finance Company and Asset Finance.
That person should not be involved in any other business. Should not be associated with Parliament, Vidhan Sabha, Municipal Corporation, Municipality or even local body. That person should also not be a direct in any other company. However, if a company is registered under section 8 of the Companies Act, 2013, or a firm engaged in trade, business or industry, then it is kept as an exception.
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