Rajan to head panel for selecting non-exec chairmen for PSBs

Will look at maximum age and tenure and then identify the candidates

The government has formed a panel headed by Reserve Bank of India (RBI) governor Raghuram Rajan to select non-executive chairmen in public sector banks (PSBs).

The panel will first prepare the norms for eligibility selection and eligibility, such as maximum age and tenure, and then identify the candidates.

The move follows the government decision to split the post of chairman and managing director in PSBs, into one of chairman (non-executive) and another of MD and chief executive officer (CEO).

It has already appointed an MD & CEO in  Indian Overseas Bank, United Bank of India and Oriental Bank of Commerce. In Indian Bank, T M Bhasin was a CMD; he is now MD & CEO. In addition, in large ones such as Punjab National Bank, Canara Bank and Bank of Baroda, where a search is on for a CEO, a non-executive chairman will be appointed.

The other panel members are Usha Thorat, former deputy governor at RBI; Hasmukh Adhia, secretary financial services, in the Union ministry of finance, and N Vaghul, former chairman of ICICI Bank.

Sources indicate several former bureaucrats and retired bankers will be eligible for the post of non-executive chairman. Except in State Bank of India (SBI), this will be a part-time board member, who will preside over board meetings and not be an executive chairman, the government had said. The move to split the CMD post was seen as the start of long-pending reforms at PSBs. Earlier, a committee headed by former Axis Bank chairman P J Nayak had suggested major changes, including the government giving up operational control in PSBs, for improving corporate governance practices.

However, the appointment process, of both chairman and CEO, is progressing at a slow pace. Four PSBs still do not have an MD & CEO. The top post in Andhra Bank falls vacant from Friday, while the heads of Bank of India and IDBI Bank will retire shortly.For large PSBs (Category-A), with a business over Rs 3 lakh crore, the government is open to recruit an MD & CEO from the private sector and pay market-linked salaries. It had issued an advertisement inviting those interested to apply, with 55 years as maximum age. The minimum age was set at 45 years. The upper age criterion was later revised to 57 years, so that many existing executive directors in PSBs would be eligible.