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The number of allegations that have surfaced against bank CEOs in recent weeks is astounding. While one is under the scanner after a female colleague accused him of using improper language, another faces sexual harassment charges.
Then there is the growing breed of CEOs with interests in businesses that directly compete with the bank and run by family members as proxy. It’s even worse when there are “shared resources” between the bank and the entity in which the CEO has a vested interest.
This brings us to a critical question: Why isn’t the integrity of a bank CEO beyond doubt?
A CEO is considered the face of an organisation — the person who sets the tone and agenda of the entity. Therefore, the CEO is expected to possess qualities such as high integrity, reputation, and professionalism, ensuring that the brand image of the bank is never compromised.
Much as the RBI has a tab on the financial health of banks, does the regulator also keep an eye on the personal traits of the CEOs?
The answer is yes and no.
All bank CEO appointments are preceded by stringent checks by the RBI, which focuses not just on professional eligibility and behavioural aspects but also the investments and assets held by the candidate and their immediate family. On the other hand, the process of reappointments is not necessarily as rigorous, perhaps because the CEO is already under the RBI’s watch and it is usually the bank’s financial performance that comes up for scrutiny.
However, given the thin line between legally correct conduct and morally ethical behaviour, especially given the recent disturbing instances in the private banking space, the test for a CEO’s reappointment must go beyond mere professional excellence to unimpeachable personal qualities too.
Agreed that CEOs usually don’t take their reappointments for granted, but familiarity born of long years of association may blind board members to faults, if any. The RBI should play the neutral umpire’s role in such cases.
After all, the tone set at the top is apt to trickle down the ranks. And in the case of banks, it is depositors’ money at stake ultimately.
While behavioural traits may not necessarily have a direct impact on a bank’s health, there are enough examples to show how one bad act is enough to pull the rug from beneath.
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