The proposal under consideration is to raise the age limit for the chairman of the country's largest lender, State Bank of India (SBI), to 65 years from 63 years, and that for managing directors of other state-owned banks to 62 years from 60, the official said.

SBI is governed by separate legislation from other government-owned banks.

"The plan is still being considered. A final decision has not been taken," the official said, declining to be named as discussions are ongoing.

The age limit for state-run bank chiefs is much lower than their private sector peers, who retire at 70 and have longer tenors. Analysts have often cited this as a reason for a lack of continuity in strategy at state-owned lenders.

Chiefs of state-run banks are generally appointed for three years and can be given an extension based on their performance.

Separately, the government is planning to give a 10-month extension to present SBI Chairman Dinesh Khara who is slated to retire in October-end, the official said.

(Reporting by Aditi Shah; editing by Christina Fincher)

By Nikunj Ohri