appointment of MD in banks

RBI circular outlining the procedure, documentation, steps involved in appointment/ re-appointment of managing director, CEO, part time chairperson in banks. Banks have to send in their papers at least 4 months before the incumbent is due to demit office. They should give at least 3 names for appointment of CEO/ MD in order of preference. Some formats of declaration/ undertaking from the incumbents have been changed. This applies to termination of appointment also.

Appointment of Managing Director and Chief Executive Officer (MD & CEO) / CEO / part-time Chairperson (PTC) in Banks – ‘Declaration and Undertaking’ and allied matters

To complete the appointment of Managing Director and Chief Executive Officer (MD & CEO)/ CEO/ part-time Chairperson (PTC) in Banks in a timely manner, the following instructions have been reviewed:

  1. DBOD.No.ARS.BC.75/C.318(C)-72 dated September 2, 1972 on ‘Section 35B of the Banking Regulation Act, 1949’, prescribing Form A, B and C relating to appointment/ re-appointment/ remuneration, etc. of Chairman, Chief Executive Officer or any other Director or Termination of Appointment of a Director;
  2. DBOD.No.App.BC.47/C.318(C)-83 dated June 7, 1983 on the same subject (as above), advising banks to submit application seeking approval for appointment/ re-appointment of Chairman and Chief Executive Officer at least four months before expiry of the term of office of the present incumbent;
  3. DBOD.No.BC.64/08.94.002/2002 dated February 13, 2002 addressed to Chairman/ CEO/ MD of all private sector banks advising banks to forward a panel of three names while submitting proposal for appointment of CEO; and
  4. DBOD.No.BC.No.95/29.39.001/2010-11 dated May 23, 2011 advising modifications in the format of ‘Declaration and Undertaking’ prescribed for conducting due diligence of Directors to determine their ‘fit and proper’ status.

2. Based on the review, the ‘Declaration and Undertaking’ (Annex I) and specimen of ‘Form A’ as well as ‘Form B’ have been revised and are enclosed with this circular.

3. To enable Reserve Bank to convey the requisite approval in time on the re-appointment of an MD & CEO/ CEO in banks, the complete applications in the prescribed forms i.e., ‘Form B’ along with ‘Declaration and Undertaking’ from candidate(s), along with the remarks of Nomination and Remuneration Committee of having satisfied itself that the information is true and complete should be submitted to the Department of Regulation, Central Office, Reserve Bank of India, Mumbai, at least six months before the expiry of the term of office of the incumbent.

4. Proposals for appointment of a new MD & CEO/ CEO, should invariably contain a panel of at least two names in the order of preference. The proposals should be submitted to the Reserve Bank at least four months before the expiry of the term of office of the present incumbent.

5. Henceforth, banks should use, at the minimum, the revised format for obtaining the declaration and undertaking from all the directors.

6. Adherence to the instructions be ensured.


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