Govt to review bank CMD selection process

The finance ministry will review the selection process for the posts of chairman and managing director (CMD) of eight public sector banks (PSBs) following complaints from some Members of Parliament (MPs). The appointments may be delayed now.

The finance ministry conducted interviews earlier this year and prepared a list of candidates. Eleven top posts in public sector banks will fall vacant in 2010. Two posts have already been filled with candidates selected last year.

MPs have now raised questions over the transparency of the process and alleged that certain norms were flouted during the selection this year.

Law makers argued that relaxations in eligibility criteria were made regarding the number of years in service as executive director (ED) and years of residual service, without obtaining an approval of the cabinet appointments committee.

“There has been a lot of ad hoc selection. Initially, even managing directors of associate banks of State Bank of India were called for the interview, but were dropped later. Candidates with less than one year and nine months of service were included for the interview at the last minute. All these point to the pressure exerted on the department of financial services (a department in the ministry of finance) to favour certain candidates,” the MPs said in a letter to the government.

In response, the finance ministry said it would now look into the allegations.

For the post of chairman and managing director in government-owned banks, candidates completing a minimum of two years as ED and two years of residual service are eligible. In case of the lack of eligible candidates, the criteria for minimum residual service could be reduced to one year nine months. However, any further relaxation would require approval of the appointment committee.

“Candidates who have completed less than one year of service (as ED) have been placed above the candidates who fulfill the eligibility criteria without any relaxation. Similarly, candidates who have residual service of less than one year and nine months have been placed above the candidates who meet all the criteria,” the letter said.

Top slots in Punjab & Sind Bank, Corporation Bank, Canara Bank, Andhra Bank, Bank of Maharashtra, UCO Bank, Indian Overseas Bank and Oriental Bank of Commerce will fall vacant in 2010. In addition, the post of chairman and managing director in IDBI Bank will also fall vacant, but the position is likely to be filled by a candidate selected during the last years’ interview.