The heads of Indian state-owned banks may get up to a 10-year extension

The top bosses at Indian public sector banks can now hold office for a maximum of 10 years as the policy has been amended to extend their tenure for up to five more years, the government said on Friday. The appointment of whole-time directors and managing directors will initially be for five years and can be extended for another five years. Until now, there was no specific cap on the term of directors after the initial five-year appointment.

The government will also consider if a similar extension of tenures is needed for the top management at the State Bank of India (SBI), they said. SBI officials have clarified that the amended policy does not apply to it yet as there is a separate SBI Act and that it would have to be notified separately.

The policy change comes as there was an “immediate and imminent” need in nationalised banks for extended tenures with many executive directors (EDs) nearing retirement, the government sources cited above said. They added that the government doesn’t want to lose the talent pool of current EDs. Private sector bank MDs already enjoyed a similar kind of extension rule, so the latest rule change brings parity to the bank MD role.