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Choose your bank chiefs well

KR Srivats | Updated on March 12, 2018 Published on November 07, 2014

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Appointments should not evoke suspicion

The coming week could be crucial for the future autonomy of public sector banks. On November 13-14, interviews will be held — once again — to fill the vacancies for chief executives in as many as eight PSBs. The UPA regime had botched up senior managerial appointments in PSBs. Top-level appointments smacked of favouritism and rules being circumvented or bent. There was no clear mechanism to ensure “due diligence” in the selection of candidates chosen for the top job, raising questions on whether ‘hidden agendas’ were at work. The appointments this time should be above suspicion.

There have been policy flip-flops on allowing lateral appointments in large banks. Till recently, the CMDs of large banks were chosen from heads of smaller banks. This policy is not without merit. Chief executives for large-sized banks (beyond, say, ₹5 lakh crore business) should indeed be picked from the leaders of smaller banks with a proven track record and experience.

Executive directors with less than one or two years’ experience should not be posted as heads of large banks — whose operations differ in size and complexity. Picking the heads of large and small banks are not the same thing. A one-size-fits-all approach is not feasible.

RBI governor Raghuram Rajan and Narendra Modi’s government are expected to turn things around. But the recent move to shunt out financial services secretary GS Sandhu ahead of the interviews does raise eyebrows. Sandhu is among a clutch of bureaucrats identified with the last government who have been shown the door. The BJP sympathisers point out that the brooms of Swachh Bharat are sweeping through the corridors of the department of financial services. But the banking sector needs some robust and consistent leadership from North Block as well.

KR Srivats is Deputy Editor

Published on November 07, 2014
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