<section class="jsx-2404185057 article__reader__magByLine"><strong>Mumbai: </strong>The government has doubled the maximum term for chiefs of public sector banks to 10 years from five years earlier by amending the Nationalised Banks Scheme, 1970. The notification, which applies to executive directors and MDs, allows for a term of five years, extendable for another five years.</section>
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<p id="2">Until now, the government could appoint a PSU bank chief for a maximum tenure of five years, including an initial appointment of three years which could be extended by two years. The retirement age continues to be 60, which means that most of the existing bank chiefs will not be eligible for extensions. However, the successors of the current MDs of large banks like Bank of Baroda, who are due to retire, may get longer tenures.</p>
<p id="3">The move will also benefit executive directors who are in their early 50s or below and close to completing their term. Bankers and consultants welcomed the move, stating that this would now enable the government to attract talent for the public sector banks, which have grown significantly since the consolidation.</p>
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<p id="2">Although the government now considers professionals from the private sector for recruitment as bank chiefs, it has not been successful in attracting new talent. Former Citibanker CS Jayakumar was the sole private sector executive appointed chief of Bank of Baroda for four years in 2015. Now the prospects of a 10-year tenure is likely to attract new candidates.</p>
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<p id="2">According to banking industry sources, most of the chiefs of public sector banks are appointed from outside the bank. It takes them a year to familiarise themselves with the bank and they cannot see through to completion any changes they introduce. The frequent changes in CEO positions also lead to change in strategy as the new chief usually has a different approach than the predecessor.</p>
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<p id="2">&ldquo;In the private sector, the chiefs of all the private banks that are doing well have had tenures for more than five years. With banks set to double in size in the next five years, there is a need for strong leadership,&rdquo; said the CEO of a bank.</p>
<p id="3">Industry sources said that the government was unlikely to increase the retirement age from 60 as it would set a precedent for other sections of the government.</p>
<p id="4">In the private sector Aditya Puri led HDFC Bank for over 25 years and Uday Kotak continues to lead Kotak Bank since it received a banking licence in 2003.</p>
<p id="5">Shyam Srinivasan has been leading Federal Bank since 2010. Earlier this year, the RBI capped the maximum tenure of public sector banks chiefs at 15 years.</p>
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Govt doubles max tenure for PSU bank chiefs to 10 years

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