PMO not in favor of FinMin proposal on bank chief appointments

Finance Ministry has put forward a proposal that the bankers whose remaining service is less than two years should be taken into consideration for the appointment as public sector bank chiefs, but the Prime Minister’s Office (PMO) has rejected this proposal. It said, with such move several candidates who are in the list for top posts of banks will be affected.

According to sources closely related to the development, PMO is happy with the intensity of appointment norms which have worked well for several years and have helped in the re-emergence of public sector banks as strong players in the banking industry.

The sources added that individuals left with less than two years of service will not get enough time to implement their decisions properly.

Meanwhile the finance ministry on the basis of feedback received from South Block, prepared a fresh set of names and sent to the Appointments Committee of Cabinet (ACC).

However PMO’s objections has come at a time when some lawmakers have written to Finance Minister Pranab Mukherjee in which they have expressed concern over the proposal to allow executive directors left with 18 months of service to be considered for appointment as bank chiefs. The members of Parliament said the decision is being taken unilaterally by the finance ministry and ACC’s approval is not taken.

They added however, since 2007 the government has been following ad-hocism in appointment of bank chiefs instead of following a uniform set of rules. Also, the government has been frequently changing norms for the candidates who were interviewed in February. The changes were done so frequently that some candidates from State Bank of India, who were called for the meeting, were dropped at the last moment.

Now, the intervention by PMO will break a long tradition of appointment of chairmen of government banks. Generally appointments in big banks are done through lateral process, i.e. the chairman of a smaller bank is appointed chief of big bank. But, for Canara Bank’s top job, the government has decided to appoint the existing executive director because present chairmen of smaller banks do not meet the two criterions, first, two years of residual service and second is, one-year experience as chairman of a smaller bank.

However Union Bank’s S Raman is listed to take charge of Canara Bank when the present chief, A C Mahajan, will be retiring in July. On the other hand, for six large banks, Punjab National, Bank of Baroda, Canara Bank, Bank of India, Union Bank of India and Central Bank of India, the top positions will be filled through lateral process.

According to sources, for meantime, the finance ministry has taken consent for eight candidates to be appointed in as many number of banks where top positions will be vacant till February next year.

Besides, Canara Bank, the government wants consent for the candidates for the appointment as chiefs of Corporation Bank, Andhra Bank, Indian Overseas Bank, UCO Bank, Oriental Bank of Commerce, Bank of Maharashtra and Vijaya Bank. The position in Vijaya Bank will be vacant in February, but the top posts in seven other banks will be vacated in 2010.

The government also wants consent from 11 general managers for the appointment of executive directors in nine banks.