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Draft RBI guidelines on leadership rotation norms for large NBFCs

ICICIdirect Research 13 Mar 2026 DISCLAIMER

As per media reports, the Reserve Bank of India (RBI) is evaluating a proposal to introduce leadership rotation norms for large non-banking financial companies (NBFCs), similar to those applicable to banks. The proposal was discussed in a meeting involving RBI, government officials and NBFC industry representatives at the Department of Financial Services, with the objective of strengthening governance standards across systemically important institutions.
Currently, banks are subject to leadership tenure restrictions under the Banking Regulation Act, but no such formal framework exists for NBFCs. The proposed guidelines are likely to apply to upper-layer NBFCs under RBI’s scale-based regulatory framework, which are subject to tighter supervision due to their systemic importance and large asset base.
The development could have implications for companies with long-tenured leadership. Bajaj Finance Ltd., for instance, has seen significant managerial continuity under Vice-Chairman & MD Rajeev Jain, who has been leading the franchise for nearly 18 years after joining as CEO in 2007 and later becoming MD in 2015.
Though RBI is yet to release draft guidelines which will be followed by final guidelines, extension of the proposed cap of ~15 years for MD/CEO roles to large NBFCs, would necessitate leadership transition planning at Bajaj Finance. While the board had already initiated succession planning following the resignation of Anup Saha in July 2025, any formal regulatory mandate could accelerate the timeline, creating a near-term overhang for the company given its leadership-driven execution model.

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