The Hindu Business Line : Succession planning: Still an elusive goal

Succession planning, one would think, is a basic requirement of running modern enterprises. More so, if the organisation in question is State Bank of India, the largest bank in the country — and a proxy for the economy itself.

Yet, we have been witness to unnecessary suspense that is built into the succession issue whenever an SBI Chief retires. The Reserve Bank of India and the Finance Ministry have to cop a lot of blame for the cavalier approach to the appointment of SBI Chiefs over the past decade.

When Mr P.G. Kakodkar, former Chairman, SBI, was asked about this at the press conference announcing the launch of his book, "My 40 years with SBI", he pointedly mentioned the practice followed in the defence services, where the army, naval and air chiefs are announced about three months before the retirement of the incumbent head. This would allow the new chief to prepare himself and also allow for a smooth transition, he said.

Flip through Mr P.G. Kakodkar's book to see how he came into his office.

Next Chairman

"It was a Saturday, 30th September 1995. I came home from the office and was just about to take a nap when I got a call from Dr Y.V. Reddy, Additional Secretary for Banking in the Finance Ministry and also on the SBI board. Mr D. Basu, the earlier Chairman had retired on 31st August, but the Government had not chosen his successor, so Dr Sinha, the Managing Director, who was to retire after a month (September 30) was directed to look after the office of Chairman for one month. Dr Reddy told me that I had been appointed the Chairman of the State Bank, and I should take over immediately. I told him it was 4 o'clock in the afternoon on a Saturday, and the Bank must be closed. He said that they had already spoken to Dr Sinha and they were all waiting at the bank for me."

Cut to the end of his tenure in March 1997. "The person next in line was Mr M.S. Verma, and I was projecting him as the next Chairman. Every time I went to Delhi, I reminded them. I met Dr Montek Singh Ahluwalia, the Finance Secretary and Mr Vasudev, the Additional Secretary of the Banking Division and urged them to take a decision about my successor well in time. But even on March 30, my penultimate day in office, they had not announced the name of the new Chairman. On March 31, I telephoned Dr Ahluwalia in the morning. He told me the selection was done, but it was awaiting the signature of the Prime Minister. I said that it was my last day, I was leaving, and I must make an announcement about my successor, so could I say that Mr M.S. Verma was my successor? He said I could do that in the bank, but I should not speak to the Press."

Ad-hoc Approach

That on the succession issue, the Government continues to adopt an ad-hoc approach is clear. See the drama during the appointment of the most recent Chairman of the SBI, Mr O.P. Bhatt, who incidentally was Executive Secretary to Mr Kakodkar when he was the Chairman.

The previous incumbent, Mr A.K. Purwar, retired on May 31, 2006. There was an announcement on May 30 that Mr T.S. Bhattacharya, Managing Director; SBI would be taking temporary charge as Chairman until further orders. A month later, it was announced on June 30 that Mr O.P. Bhatt was appointed as the SBI Chairman for a five-year term.

More Stories on : People | Public Sector Banks | State Bank of India

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Life insurance new biz nearly doubles

VBC Finance to join hotel project

Nabard concerned over drop in refinance to rural co-ops

Nabard employees to get wage hike

Panel for focus on institutional finance for rural housing

ICICI Bank's hybrid tier-I securities rated `BB-'

Bankers find ATM licensing irksome

Vijaya Bank ATM in Mangalore

Employees oppose FDI in insurance

Succession planning: Still an elusive goal