Govt open to private-sector candidates for top jobs at PSBs

Chances of such appointments not ruled out if recommendations come from the search committee

The government might consider candidates from the private sector to head large public sector banks (PSBs), a senior finance ministry official said on Friday.

Speaking on the sidelines of a two-day banking retreat, organised by the finance ministry, the official said the government might consider such candidates if there were recommendations in this regard from the search committee.

The retreat is aimed at initiating long-pending reforms in the banking sector. Some of the areas to be discussed are consolidation and restructuring of PSBs, technology, human resources and financial inclusion.

Currently, top positions are vacant at three large state-run banks — Bank of Baroda, Canara Bank and Punjab National Bank.

On Wednesday, the government had split the post of chairman & managing director (CMD) at PSBs. While appointing managing director & chief executives at four mid-sized PSBs, it had said a separate process would be followed for large banks.

Through the next few years, many PSBs will see a slew of retirements — both at the mid and top levels.

Typically, PSB chiefs are selected from within these banks. An executive director of a bank could, for example, be elevated to the post of chairman of a different bank. Often, when someone takes charge as chief of a PSB, she/he has service of only about a year left.

The Reserve Bank of India had suggested splitting the post of chairman and MD because those appointed to such posts also preside over board meetings and, as such, are extremely powerful. Earlier, a committee headed by former Axis Bank chairman P J Nayak had suggested various radical changes at banks, including the government giving up control of state-run banks to improve corporate governance.

The committee had also suggested fixed tenures for the top management of PSBs — for example, five years for chief executives and three years for executive directors.