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Succession plan: RBI may impose stricter timelines on private banks

Date: 13-04-2020
Subject: Succession plan: RBI may impose stricter timelines on private banks
To ensure a smooth succession of the top brass, the Reserve Bank of India (RBI) may impose stricter timelines on private banks to identify the managing director (MD) and chief executive officer (CEO)-designates.

According to a Business Standard report, the extension of tenures of executives may depend on how smooth the succession plan of their respective bank is.

The RBI may consider the executive's board experience, their record of running significant commercial operations, and contribution to deliberations for the evaluation of their candidature, the report added.

The central bank also emphasised on the need to identify the ‘number two’ in the bank well before the tenure of the incumbent boss expires. Not many private banks have a deputy MD and CEO.

Amid the central bank's call for deeper succession planning in private banks, the responsibilities of nomination and remuneration committee will also go up, the report added.

Earlier in April, the RBI said that private sector banks should declare the succession plan of the new MD & CEO at least four months before the expiry of the term of the present incumbent. The proposals for appointment should invariably contain a panel of at least two names in the order of preference, it added.

Source:- moneycontrol.com

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