The Finance Ministry’s proposal to ease the appointment norms of PSU bank CMDs, MDs and directors is well on its way to being implemented. The government kicked off the process of filling up vacancies for the top job in public sector banks with Sudhir Kumar Jain, executive director of Bank of Baroda being appointed as the Chairman and Managing Director (CMD) of Syndicate Bank with tenure of five years.
Jain was appointed “for a period of five years from the date of taking over charge or until further orders, whichever is earlier,” a North Block official said.
The Finance Ministry had been pressing for longer tenure for bank CMDs, a move that it believes is essential to give bank bosses adequate time to take important long-term decisions. The Finance Ministry is also looking to increase the retirement age to 64 years from the current 60 years.
Almost nine CMDs of government-owned banks are likely to retire in financial year 2013-14. Banks including IDBI Bank, Andhra Bank, Bank of Maharashtra, Corporation Bank, Union Bank of India and Central Bank of India will soon have vacancies for the top job.
The government has also appointed S B Mainak, Executive Director, Life Insurance Corporation (LIC) as Managing Director (MD), LIC from the date of taking over charge till February 29, 2016.
A committee on human resource issues of PSBs, chaired by former Bank of Baroda CMD A K Khandelwal, had submitted a report in June, 2010 batting for at least four to five years tenure for CMDs. “In order to promote meritocracy and high degree of professionalism, banks need to have best in class leadership at the top. The main criteria for selection have (sic) to be strategic thinking and turnaround ability. CMDs in proposed ‘Navratna’ banks to have a clear tenure of 4 to 5 years,” the report said. Currently, bank CMDs serve for only one or two years as they are appointed closer to their retirement age.
The Khandelwal committee had also warned about leadership gaps at the top level in PSBs from 2012. “Leadership gaps in PSBs are palpable in as much as that in the next five years, 80 per cent of GMs (general managers), 65 per cent of DGMs (deputy general managers), 58 per cent of AGMs (assistant general managers) and 44 per cent of CMs (chief managers) would be retiring,” the committee said.