New rule to pick PSU bank heads

The government today scrapped the selection process of public sector bank heads after a high-level panel found irregularities in the exercise by the previous UPA government.

The probe into the selections to banks such as Bank of Baroda and Canara Bank was initiated following the arrest and termination of the tenure of Syndicate Bank chairman S.K. Jain in August for alleged graft.

A finance ministry statement said the future vacancies of chairman and managing directors (CMDs) as well as executive directors of PSU banks would now be filled through a new selection process.

A panel headed by the RBI governor and including the financial services secretary, during the previous UPA regime, had shortlisted chairmen and managing directors for Bank of Baroda (BoB), Canara Bank, Indian Overseas Bank (IOB), Oriental Bank of Commerce and United Bank of India (UBI).

In UBI, the chairman’s post has been lying vacant since February after Archana Bhargava resigned. There were rumours that the then UPA government had zeroed in on Mukesh Kumar Jain, the executive director of Punjab & Sind Bank, to replace Bhargava.

BoB became headless in August after its chairman S. S. Mundhra was appointed RBI’s deputy governor. In the case of IOB, it was speculated that Arun Srivastava, executive director at Bank of India, would bag the job. Canara Bank, too, is without a chairman after the retirement of R. K. Dubey this month.

Following the developments at Syndicate Bank, there have been calls to replace the selection process of chiefs of PSU banks.

Subsequently, the PJ Nayak committee has also recommended the separation of posts of chairman and managing director in PSU banks, a proposal that has found support with the RBI.

The government has now decided to scrap the entire selection process and fill these vacancies as well as others, including Syndicate Bank, through a fresh selection process involving the RBI or his nominee.

The ministry had set up a committee, comprising the expenditure secretary, the RBI governor and the secretary of school education, to examine the selection process.

“After receipt of the report of the committee, the government has decided to cancel the current selection process of CMDs/EDs of public sector banks,” the statement said.

To fill up these vacancies, the government has decided the selection will be done by a panel comprising the RBI governor or his nominee.

Courtesy: Telegraph