|RBI Governor Rajan|
THE government will soon appoint new heads of major public sector banks, RBI Governor Raghuram Rajan said on July 2.
“The government is seized of the issue — the need to move quickly on the appointment process… Now we are very close to the announcement, but the final word on that has to come from the government,” he told reporters after a meeting of the RBI board in Chennai.
The department of financial services had earlier sought applications for the post of MD and CEO...in Punjab National Bank, Bank of Baroda, Bank of India, Canara Bank and IDBI Bank for a fixed term of three years.
A final decision will be taken by the Appointments Committee of the Cabinet (ACC), headed by Prime Minister Narendra Modi.
When asked whether the absence of full time PSU bank chiefs is leading to deterioration in performance of banks, Rajan said: “All bankers are coming to us and saying the sooner we put the heads in place, the better. I don’t know what the actual analysis would reveal. I think that if the heads are important there would be some deterioration, whether it is significant or not I do not know.”
In April, the department of financial services had relaxed the eligibility criteria for appointment of heads of public sector banks.
While the age limit was increased from 55 to 57 years, the mandatory board-level experience for the applicants was reduced to one year from three years to invite more experienced talent for heading large public sector banks.
In December, the government had appointed Managing Director and CEO in four state-owned banks — Indian Overseas Bank, Oriental Bank of Commerce, United Bank of India and Vijaya Bank. The MD and CEO of Syndicate Bank was appointed in May.
Earlier, the Finance Ministry asked the media to refrain from speculation on the appointment of heads of public sector banks.
The Finance Ministry in a statement issued on June 22 said: “Media persons are requested to refrain from writing articles based on speculation about the outcome of selection process for the post of MD & CEO of five public sector banks”.
“Some news items have appeared in certain section of media about the outcome of selection process for the post of MD & CEO of five public sector banks (PSBs) recently. Most of these items are based on speculation which are far from the truth”, the statement noted.
The ministry pointed out that reports based on speculative names create unnecessary confusion not only among the candidates who are part of the selection process but also among the members of public at large. It said the process of selection is kept confidential and, therefore, the result can only be known after the approval of the Appointments Committee of Cabinet (ACC).
In February, the Appointments Committee of Cabinet (ACC) had approved the criterion and method of selection of managing director and CEOs in five public sector banks namely Bank of Baroda, PNB, Bank of India, Canara Bank and IDBI Bank.The guidelines had opened the doors for both governmental and private sector candidates. The candidate should have at least 15 years of mainstream banking experience, of which three years should at least be at the Board level. The candidate should be in the age group of 45 to 55 years and will have a fixed tenure of three years, subject to normal age of superannuation of 60 years.