Tuesday, October 29, 2013

FinMin relaxes norms for top jobs in govt banks

FinMin relaxes norms for top jobs in govt banks

Highlights

    Fin Min to interview EDs this week for CMD vacancies arising only after August 2014

    CMDs of six public sector banks to retire in 2014-15

    This may be the first time RBI governor to conduct the interviews

    Unlike SBI, no fixed tenure for chairman in public sector banks

    Appointment process in govt banks may turn into a political slugfest
The finance ministry has relaxed the norms for selection of chairman and managing director in public sector banks which will now allow executive directors who were appointed merely couple of months back to appear in the interviews.

Interestingly, the government has decided to interview the candidates as early as this week for vacancies that will arise not before August 2014 – after the general elections.

According to norms, candidate needs to complete one year as executive director to become eligible for chairman and managing director. However, the criteria for residual service of two years of a candidate have not been tweaked.

The finance ministry has also seems to have kept the communication made by the department of personnel and training (DoPT) conveying the observations and directions of the Appointment Committee of the Cabinet regarding appointment of top jobs in government banks and financial institutions – in abeyance and proceeded with the selection process.

Among others things, suggestion was made to revisit the requirement of residual service and introduction of fixed tenure in public sector banks.

The concept of fixed tenure has been introduced in State Bank of India (SBI) by giving the new chairperson fixed tenure. Arundhati Bhattacharya, who was appointment as SBI’s chairperson earlier this month, was given a fixed tenure of three year.

The department of financial services were asked to examine if the same system could be extended to all public sector banks.

The finance ministry’s decision to relax the norms and conduct interviews early is also snowballing into a political controversy with a Shiv Sena Member of Parliament and a member of the standing committee of finance Chandrakant Khaire, writing to the finance ministry highlighting hastily selection process of CMDs in public sector banks before the finalization of the ACC guidelines.

While the government has decided to interview the candidates now, but clearance from the central vigilance commission (CVC) could not be received at this stage as such clearances are only received couple of months prior to the appointment.

A selection committee will interview 19 executive directors of various public sector banks for six positions that will fall vacant in the next financial year 2014-15. In the present financial year, chairman of four public sector banks will retire.

The government is yet to fill up vacancies in two public sector banks – Andhra Bank and Bank of Maharashtra where the chairman had retired in the last couple of months.

The selection committee is headed by Reserve Bank of India (RBI) governor Raghuram Rajan and includes officials from finance ministry and academic world. According to banking industry sources, the new RBI governor is likely to break the tradition of sending his nominee (which is a deputy governor) and would be himself present during the interviews and conduct them.

The interviews will be conducted at State Bank of India head office in Mumbai, and not in New Delhi as earlier practiced.

Source: http://www.business-standard.com

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