New Delhi: The government will be able to retain the best talent in the banking industry thanks to the government’s decision to expand the maximum term for CEO and MD of public sector banks to 10 years.

A government announcement dated November 17, 2022 states that the period of the appointment has been increased from the previous 5 years to 10 years, subject to the superannuation age of 60 years.

Previously, the MD or executive director of a public sector undertaking (PSU) bank could only hold the position for a maximum of 5 years or until they turned 60, whichever came first. This also applies to all Central Public Sector Enterprises’ full-time directors (CPSEs).

“A whole-time director, including the managing director, shall devote his whole time to the affairs of the nationalised bank and shall hold office for such initial term not exceeding five years and extendable up to a total period, including the initial term, not exceeding 10 years, as the central government may, after consultation with the Reserve Bank, specify and shall be eligible for re-appointment,” it said.

Nationalized Banks (Management and Miscellaneous Provisions) Modification Scheme, 2022, it was noted, would be the name of the amendment.

A whole-time director’s term of office, including the managing director’s, may be terminated by the central government at any time before the end of the term designated by giving him written notice that is at least three months long or three months’ salary and benefits in lieu of notice.

The government’s move will assist banks in keeping talent that advances to the level of full-time directors at a young age of 45 to 50. PSU banks currently have a large number of full-time directors who joined the board while they were young. They would gain from the modification.