The government will consider private sector candidates to head large public sector banks, a top finance ministry official said today.
Currently, the top position is vacant in three large public sector banks, namely Bank of Baorda, Canara Bank and Punjab National Bank.
Speaking at the sidelines of two-day banking retreat, organised by the Finance Ministry, the official said that if the recommendation for private sector candidate comes from search committee, then the government may consider it.
The government has recently split the chairman and managing director’s post in public sector bank. It has appointed MD & CEO in four mid-sized public sector banks and said for large banks a separate process will be followed.
Typically public sector banks chiefs are selected from with the banks like an executive director of a bank is promoted as a chairman of a different bank.
Public sector banks are facing huge retirement – both mid-level and top level – in the next few years. It is often the case that a candidate have only one year to reach retirement after he takes charge of public sector banks.
RBI had suggested splitting the CMD post because a bank CMD also presided over board meetings and, as such, was extremely powerful. Earlier, a committee headed by former Axis Bank chairman PJ Nayak had suggested radical changes, including the government giving up control in PSBs, for improving corporate governance practices.
The Nayak committee had also suggested fixed tenure for public sector bank top management like five years for chief executive and three years for executive directors.
The two day retreat is aimed at initiating long pending reforms in the banking sector. Some of the areas which will be discussed are consolidation and restructuring of public sector banks, technology, human resources, financial inclusion, among others.