Government extends the maximum tenure of MD and CEO of the Public Sector Banks to 10 Years

Tags: Economy/Finance

The Government of India has raised the maximum tenure of the managing director (MD) and chief executive officer (CEO) of Public Sector Banks (PSB) to 10 years from five years. However there is no change in the retirement age of 60 years.

According to the earlier rules, the MD or the executive director of a public sector undertaking bank was eligible for a maximum tenure of 5 years or until they reach 60, whichever was earlier.

These changes were notified by the government through the Nationalized Banks (Management and Miscellaneous Provisions) Amendment Scheme, 2022.

The move will help the government retain talents, who rise through the ranks relatively quickly at state-run banks. It will also enable the PSBs to have relatively young leadership teams that will be in a better position to realise a longer-term vision.

However, the Central government retains the right to terminate the term of a whole-time director, including the managing director, any time before the expiry of their tenure, by giving them a notice of not less than three months in writing, or three months’ salary and allowances in lieu of the notice.

Public Sector Banks 

Banks owned by the Government of India are called Public Sector Banks. Currently there are 12 Public Sector Banks in India.