Appointment of directors on the boards of public sector banks is set to be further delayed as the finance ministry is likely to review all the proposals before sending those to the appointments committee of the Cabinet (ACC).
Directors’ post in most of the public sector banks – which are filled by the government — are vacant for a long time, with some lying vacant for nearly a year now. Some of the banks do not even have a chartered accountant (CA) among its directors, and, as a result, the audit committee has been headed by non-CA directors.
Finance ministry officials said former finance minister Pranab Mukherjee had approved all board director appointments in public sector banks — the number is more than 50 — just before leaving the finance ministry in June this year.
Some of the positions were vacant for months but before going, he cleared appointments till March 2013.
However, since those are just nominations, fresh approval will be taken from the current finance minister.
P Chidambaram will take a fresh look at the proposals before the nominations are sent for ACC approval, sources said. A director of a public sector bank is generally given a three-year term.
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The earlier finance minister’s proposals for the appointment of chairmen and managing directors in public sector banks is already being reviewed and the process of lateral movement is expected to come back.
Breaking the tradition of lateral movement, that is, appointing a smaller bank’s CMD in large public sector banks like Bank of India, Bank of Baroda and Canara Bank, the finance ministry had decided to promote executive directors as chairman and managing director of large banks. However, sources said the decision is also now reversed with finance ministry going back to lateral movement policy.