INSUBCONTINENT EXCLUSIVE:
MUMBAI: The Reserve Bank of India may face legal challenges to its rule on the age limit for bank CEOs, unless it is changed.
The RBI caps
the age limit for banks at 70
But under the Companies Act, banks that are also registered companies can have chief executives who are over 70 years of age by passing a
The central bank will continue to retain its control over bank managements irrespective of its decision on the age limit, he added.
In 2014,
RBI raised the upper age limit for bank managing directors and CEOs to 70 years from 65, in line with the Companies Act, 2013
Under the Act, a company can also appoint, or retain, people aged 70 years or older as director if shareholders approve it by passing a
special resolution.
As per RBI rules, the current managing directors at IndusInd Bank and HDFC Bank are set to retire in March and October
2020, when they would attain the age of 70.
There have been changes at Axis Bank, ICICI Bank and Yes Bank, but those were not driven by the
of stakeholders, the RBI may take a dynamic approach and ask the current CEO to continue in an advisory role which can be constituted after
the maximum retirement age for a CEO is 72 years, with companies having the right to prescribe a lower limit
In the US banking sector, JP Morgan and Morgan Stanley, the retirement age for CEO is 72
Nearly 75% of SP 500 firms have by-laws that require CEOs to retire at or before 65 years of age.
In March 2017, HDFC Bank elevated Paresh
Sukthankar to the post of deputy MD but he resigned in August 2018, increasing the probability of an external candidate being appointed to
lead the bank.
Over the past 25 years, HDFC Bank, under managing director Aditya Puri, has grown to become the largest private bank with a
market share of 8.4% and market capitalisation of 6.3 lakh crore
Its market cap is more than the next two private sectors banks combined as well as all PSU banks put together
This has been enabled by a steady 32% compounded annual growth rate in earnings over the past two decades.
IndusInd Bank is a well-executed
transformation story after Romesh Sobti took over the reins in fiscal 2008
After he took over, the bank has transformed from being a commercial vehicle financier to having a comprehensive product portfolio across
retail and corporate segments
and 16.5% in FY18 from 0.3%/6.9% in FY08, Motilal Oswal said in its report.
