Clearly, HDFC Bank’s preference for civil servants has not waned a wee bit even though it had a difficult time with its former part-time chairman, Atanu Chakraborty, who too was a retired IAS officer and had worked in the finance ministry as its economic affairs secretary. Mr Chakraborty quit in March, citing differences of opinion with the way the bank was functioning.
That prompted HDFC Bank to take two quick decisions. It appointed veteran banker Keki Mistry its part-time chairman for about three months. This tenure was extended and is now due to end in the third week of September. It also commissioned a legal review to examine Mr Chakraborty’s statement that “certain happenings and practices within the Bank were not in congruence with his personal values and ethics”. That review found that those allegations were “not substantiated”.
The appointment of Mr Kumar for a three-year term was a third decision, taken in quick succession. To be sure, the choice of Mr Kumar was a little unusual. He occupied a constitutional post from May 2022 to February 2025 as CEC. Many questions of propriety were raised when Manohar Singh Gill, the eleventh CEC (from December 1996 to June 2001), decided to enter politics and became a member of the Rajya Sabha for two terms from 2004 to 2016, during which time he also became a minister in the Manmohan Singh government between 2009 and 2011. Will similar questions of propriety be raised when a former CEC takes up a board position in a listed bank?
But India’s private-sector banks do have a special fascination for retired IAS officers. Two other banks, figuring among the top five private lenders, have retired IAS officers as their part-time non-executive chairmen. ICICI Bank has former Cabinet secretary Pradeep Kumar Sinha and Kotak Mahindra Bank C S Rajan, former chief secretary to the Government of Rajasthan. Axis Bank has a former deputy governor of the RBI, N S Vishwanathan, and Indusind Bank a former State Bank of India managing director, Arijit Basu, as their chairman.
Last month, another retired IAS officer and former insurance regulator, Debasish Panda, was appointed part-time non-executive chairman of yet another private-sector lender, Bandhan Bank. Mr Panda too served as secretary in the Department of Financial Services in the finance ministry and superannuated in 2022, before completing a three-year term as chairman of the Insurance Regulatory and Development Authority of India (Irdai) in 2025.
The practice of hiring retired IAS officers to chair the boards of corporate entities or banks is not new. Former finance secretary Ashok Jha joined Hyundai India as its president a few months after he helped the then finance minister, P Chidambaram, present the Budget for 2007-08, securing exemption from the cooling-off period required before a government servant can join the private sector. Retired or retiring IAS officers those days were not always sure of securing that exemption from the cooling-off period. In 1990, B G Deshmukh had to wait for months before he could join the Tata group after demitting office as principal secretary to the Prime Minister.
It must be noted that in almost all cases, retired civil servants perform non-executive roles. There may be nothing wrong in this practice. Nor should there be any suggestion that retired civil servants chosen for such roles are not competent. Indeed, they join the civil service through a rigorous selection process and gain invaluable experience while working in a wide range of fields, dealing with both the government system and the corporate sector. Apart from their domain expertise acquired while working for the government in different departments, retired civil servants build an important asset: Deep knowledge of how the government functions. This understanding of government functioning is useful for companies or banks operating in a system where such knowledge is immensely useful, if not indispensable.
For financial-sector entities in India, there is yet another factor that cannot be ignored, particularly in the past few years. For more than seven years since December 2018, the RBI has been headed by retired civil servants. Irdai, too, has been headed by retired IAS officers for the past eight years. Barring a gap of three years from 2022 to 2025, when a private-sector professional headed it, the Securities and Exchange Board of India (Sebi) too has been chaired by retired civil servants since 2005.
If Indian enterprises or banks prefer retired civil servants to occupy non-executive positions on their boards, it is because dealing with a regulatory system that is largely headed by retired IAS officers then becomes relatively easy. Senior professionals from financial-sector entities can of course perform the role of steering their boards as non-executive chairpersons. But these professionals may not have the kind of equation and professional understanding of the regulators who belong to the civil services. It is, therefore, not fair to put the blame on financial-sector players for preferring retired civil servants to head their boards.
In some ways, the preponderance of civil servants in the financial-sector regulatory system has contributed to the absence of a level playing field for professionals in the private financial sector. If that level playing field has to be restored, the government has to take the first step. It must re-examine the option of throwing open the regulatory jobs in the financial sector to candidates from the private sector. Over time, a body of private-sector professionals capable of leading these regulatory bodies should emerge. That might mean fewer options for retired civil servants. But it would curb the tendency of many financial-sector entities to look for retired civil servants as their non-executive chairpersons.
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