Eligibility criteria for top posts in public sector banks need slight tweaking

The Centre’s move to throw open the top job in five big public sector banks (Bank of Baroda, Bank of India, Punjab National Bank, Canara Bank and IDBI Bank) is a major step forward in unshackling them from Government control. 

However, the eligibility criteria mentioned for the posts of MD and CEO are a bit stiff and could do with slight tweaking in order to get a wider crop of suitable candidates. 

First, the criteria that candidates need three years’ board level experience and must be below 55 years of age is unlikely to be fulfilled — at least by candidates working in public sector banks.

Observers say that there may be only one or two executive directors in the 27 public sector banks who will qualify. Instead, they think the Government should relax the eligibility criteria pertaining to board experience so that General Managers and Deputy General Managers in public sector banks can also apply.

Many of these candidates would have completed more than 25 years of service. Besides, many of them do have experience in dealing with boards to make presentations or defend their proposals. Experts think the net should be cast a bit wider by opening the field to executives in NBFCs (non-banking finance companies), considering their lending experience as well as background in financial inclusion.

The Government has offered a three-year term to the CEOs of these banks. This seems too short because it normally takes a CEO 6-12 months just to get a hang of operations and figure out what is going on. Subsequently, it takes at least a year or two to push changes and implement a new agenda, and by then it will already be time to start winding up. 

A five-year term or at least a three-year term plus an extension on mutually agreeable terms could have been incorporated to give some degree of stability. Otherwise, what is the point in asking for candidates younger than 55?

The other interesting aspect in the job offer is that the pay is flexible. This will mean that for the first time a public sector bank CEO can earn more than a Joint Secretary. 

Despite it being acknowledged that public sector bank chiefs need to be paid more, it remained lip service because their pay scales were linked to civil service pay scales.

Most public sector bank chiefs earn ₹20-25 lakh a year. Private sector bank chiefs get paid anywhere between four and twenty times higher.

Hopefully, this striking disparity will be bridged and the Government will finally set right an anomaly. One consequence of this move will also be that CEOs of big public sector banks will get paid more than those of other smaller banks. 

It will be interesting to see what response these jobs draw from private sector aspirants. Senior executives in private sector banks could be drawn in by the scope of the challenge, if not the remuneration, although the flexible pay being offered is a definite positive.

What may however, be a deterrent to some candidates is the exposure to the CVC (Central Vigilance Commission) and the Right to Information Act (RTI) that such jobs may entail. Whoever gets the job will have a tough task on hand. Pushing through changes in these large public sector banks will not be easy given their size, legacies, cultural differences and radically different working environment.

The first challenge will be to handle de-motivated/disappointed senior staff who may feel done in by the change in selection rules, which make them ineligible for higher posts.

This has happened a couple of times during the past few years and point to the need for a clear-cut and stable policy on higher-level appointments. 

The difficulties notwithstanding, the move to recruit chiefs from a wider field is a laudable initiative. It will now need brave men and women to respond to this challenge.

 An exciting period seems guaranteed for these banks and their watchers.