Upper-Layer NBFCs: Fixed Tenure for Chiefs Under Review
Why in the news
Authorities are considering time-bound terms for heads of large, systemically important NBFCs, similar to private banks.
Proposals
- Fixed tenure for senior executives, like private bank CEOs.
- Two or more whole-time directors beyond the MD and CEO.
- Structured succession plans for leadership continuity.
The four SBR layers
| Layer | Who falls in it |
|---|---|
| Base | Assets up to ₹1,000 crore |
| Middle | Assets above ₹1,000 crore |
| Upper | Systemically important NBFCs picked by RBI |
| Top | NBFCs posing significant systemic risk |
Existing bank rule
In April 2021 RBI limited private bank MDs and CEOs to 15 years, with a 70-year age ceiling, which strengthened governance and leadership planning.
Exam angle
- SBR aims to tighten oversight and cut regulatory arbitrage between banks and NBFCs.