UNEASE IN THE CORNER ROOM

REGULATOR RBI’S GOVERNANCE CIRCULAR HAS PRIVATE BANKS AND THEIR CEOS IN A SPIN. WHAT ARE THE IMPLICATIONS?

- RAGHU MOHAN

A FORTNIGHT AGO, Shyam Srinivasan got a fresh three-year term until September 2024 at the helm of The Federal Bank. The Reserve Bank of India’s (RBI’s) nod put an end to speculation: “will he, won’t he—get to stay on?” He had been on (two) consecutive one-year extensions. The arc lights are now on Vishwavir Ahuja of RBL Bank and Murali M. Natrajan of DCB Bank—both are on a year’s lifeline. Uday Kotak of Kotak Mahindra Bank, whose stint ended on December 31, 2020, got an extension until end-December, 2023. Just in time. But nobody’s sure of their fate after that.

The tenures of private banks’ managing directors (MDs) and chief executive officers (CEOs) have been a bone of contention since the RBI’s June 2020 ‘Discussion paper on Governance in Commercial Banks in India’. Until then, it had been taken for granted that, but for the untoward, they will continue to be at their desks as long as they wished. In the past, they have, except those accused of misdemeanors such as ICICI Bank’s Chanda Kochhar and YES Bank’s Rana Kapoor, who were nudged out. But a circular issued on April 26 this year imposed a cap of 12 years and 15 years, on the stints of promoter and professional CEOs, respectively, in private banks. It has put those in the corner rooms at considerable unease.