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Draft RBI guidelines on leadership rotation for large NBFCs

ICICIdirect Research 13 Mar 2026 DISCLAIMER

The Reserve Bank of India is evaluating a proposal to introduce leadership rotation norms for large Non Banking Financial Companies, similar to rules already followed by banks. The discussion involved the regulator, government officials and NBFC industry representatives, with the aim of strengthening governance at systemically important institutions.

At present, banks follow leadership tenure restrictions under the Banking Regulation Act, but NBFCs do not have a formal framework. The proposed norms are expected to apply to upper layer NBFCs under the scale based regulatory framework, which face tighter supervision due to their size and systemic importance.

The move could affect companies with long tenured leadership teams. Bajaj Finance is one example, where Vice Chairman and Managing Director Rajeev Jain has led the company for nearly 18 years, joining as Chief Executive Officer in 2007 and becoming Managing Director in 2015.

If the proposed 15 year tenure cap for Managing Director or Chief Executive Officer roles is extended to large NBFCs, Bajaj Finance may need to accelerate leadership transition plans. The board had already begun succession planning after the resignation of Anup Saha in July 2025, but a regulatory mandate could create a near term overhang for the company given its leadership driven execution model.

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