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RBI steps up scrutiny of private bank CEOs; gives only 3-year term for Sandeep Bakhshi

Business Today logoBusiness Today 17/10/2018 BusinessToday.In
a person standing in a room: RBI steps up scrutiny of private bank CEOs; gives only 3-year term for Sandeep Bakhshi © India Today Group RBI steps up scrutiny of private bank CEOs; gives only 3-year term for Sandeep Bakhshi

The RBI appears to have tweaked its norms for appointment of bank chiefs, opting to play safe given the state of the banking sector. The regulator yesterday approved the appointment of Sandeep Bakhshi as ICICI Bank's Managing Director and Chief Executive Officer for just three years against the five-year term sought by the lender.

After the sudden resignation of Chanda Kochhar, who is facing inquiry related to alleged nepotism and quid pro quo in extending loans to certain entities, ICICI Bank's board had elevated Chief Operating Officer (COO) Bakshi as the new head for five years until October 3, 2023, subject to regulatory and other approvals. But while the RBI used to approve five-year terms for bank chiefs earlier, it is now clearing shorter ones.

Last month, Axis Bank's next CEO Amitabh Chaudhry received RBI's nod for a three-year term starting January 1 and ending on December 31, 2021. Then in June, Yes Bank shareholders had approved Rana Kapoor's re-appointment as the MD and CEO of the bank for three years starting September, subject to RBI's approval. But the central bank curtailed his term only till end-January. It has taken a similar tough stance in the case of Shikha Sharma's re-appointment as Axis Bank's head, paving the way for Chaudhry.

The RBI has been scrutinising bank CEO appointments closely in recent months, especially after the war of words with the government over its accountability for the Nirav Modi-PNB fraud. In March, indirectly blaming the RBI for belatedly wakibg up to the scam, Finance Minister Arun Jaitley was d saying that regulators "ultimately decide the rules of the game and they have to have a third eye kept perpetually open and turned towards the sector. But unfortunately, in (the) Indian system, we politicians are accountable, the regulators are not."

In response, RBI Governor Urjit Patel had retorted that the apex bank had better regulatory control over private banks than the state-owned ones, blaming the "system of dual regulation by the Finance Ministry in addition to RBI" for the same. The regulator's recent moves serve to illustrate that point.

With PTI inputs

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