The Union finance ministry has told all government-owned banks to follow a standardised policy on personnel management at senior levels.
In a recent note to public sector bank chiefs, the ministry said the appraisal system, particularly at the level of general managers and deputy general managers, should be streamlined.
According to sources, the ministry felt the current vacuum at the top management in these banks was largely due to divergent human resource policies.
The ministry wants prospective executive directors (EDs) to have experience in all aspects of the banking system, such as retail, field, recovery, corporate lending and treasury.
“A candidate should have worked at least two years in zonal and regional offices before becoming general manager. Also, the ministry has recommended reducing the tenure of scale-1 officers to five years,” said a senior official at a mid-size public sector bank.
Currently, a scale-1 officer takes seven years to elevate to scale-2. The idea behind the move is to increase the tenure of officials at the level of EDs and chairman and managing directors (CMDs), as the ministry wants an individual to have at least eight years of service left when he becomes an ED or a CMD.
“Currently, in the entire public sector banking ecosystem, most officials reach 55-57 years of age by the time one becomes an ED or CMD. In most banks, a CMDs tenure is limited to two-three years, which is not ideal for business continuity and stability,” said an official in a large government bank.
The ministry has also specified that large public sector banks should have 27 general managers (GMs), so that each of them handles only one portfolio. “Generally, GMs have more than two portfolios. The number of Deputy GMs should be three times the number of GMs,” added a senior official at a large public sector bank.
To become a GM, a candidate must have worked as DGM for at least two years. Banks have approached the ministry to relax this criterion to 18 months, so that vacancies could be filled.
The ministry has also asked banks to implement the recommendations (those accepted by the government) of the Anil Khandelwal committee on personnel practices in public sector banks.
Bankers, however, fear the ‘template’ on HR policies as proposed, similar for all banks, would curb innovation and limit their independence to decide on HR issues.
In the recent past, a host of guidelines were issued by the finance ministry, from norms on loan syndication, audit of accounts and asking to review the pricing of loans, after the RBI reduced interest rates.