Flagging the possibility of a leadership vacuum at the top in public sector banks due to loss of experienced hands on account of retirements, Reserve Bank of India Deputy Governor SS Mundra on Wednesday emphasised on the need to build capacity as banks cannot be ‘leaderless’.
Speaking at State Bank of India’s third banking and economic conclave, Mundra observed: “We are able to talk about driverless cars but I think we are far away to talk about a leaderless bank. I think that is not going to happen tomorrow.”
Public sector banks are staring at a retirement decade. While recruitments are happening at the junior levels, there would be a virtual vacuum at the middle and senior level for some time to come.
The problem for PSBs will get accentuated once the banks that have been new licences start hiring.
Mundra said out of the 20 public sector bank chiefs, eight of them will retire in 2017, 10 in 2018 and there would be only one who would be retiring beyond the next two years.
When it comes to the second rung leadership, the RBI Deputy Governor said five are retiring in 2016, seven in 2017, 10 in 2018, 12 in 2019 and the remaining three will retire in 2020.
Nearly 73 per cent of the deputy general managers and general managers put together at PSBs are above 55 years of age. And another 23 per cent are in the age group of 50-55. This leaves them with little chance of getting promotions before retirement.
Hence, banks will need to redraw their organisational profile and create HR systems and processes best suited to the needs of the future. Mundra said “So this is whole profile of leadership, the succession line is missing and as I said before, it cannot be a driverless car. So this is another area which needs a serious attention.”
The Deputy Governor batted for at least five-year tenure for public sector bank chiefs if he or she meets the government-defined milestones. He felt that if the milestones are achieved at the end of the three years, then the next two years should be automatic without any questions asked.