RBI moots more executive directors in public sector banks

The Reserve Bank of India (RBI) proposes to strength the board of large public sector banks by inducting greater number of executive directors (EDs) to effectively manage their operations across the country.

"One ED and one chairman-cum-managing director for each bank do not suffice in the case of large banks like Bank of Baroda and Punjab National Bank," said K J Udeshi, RBI deputy governor.

In contrast, State Bank of India (SBI) has one chairman, two managing directors, five deputy managing directors, and one chief financial officer.

Udeshi was speaking on the sidelines of a seminar on 'Quality Initiatives for Financial & Banking Sector', organised jointly by Indian Banks' Association and KPMG today.

Banks need to have at least two EDs on account of new emerging areas of operations and to look after human resources, service quality in keeping with the geographical dispersed nature of the Indian banking system, said A K Khandelwal, chairman and managing director, Dena Bank. He cited his problem when he was earlier ED at BoB, and had 25 general managers reporting to him.

Udeshi raised the need to strengthen the board in order to improve customer service in public sector banks. Training and change in policy is necessary if banks are to retain good people, and groom others for higher positions, she pointed out.

"Timely, prompt and efficient service is lacking in banking services and the absence of quality could pose a challenge to existence of banks," she added.

The market share of public sector banks has fallen from 94 per cent 10 years back to 75 per cent today, said H N Sinor, chief executive, IBA.

The deputy governor admitted that while public sector banks could not reward employees with attractive pay scales and allowances, they could devise various methods to motivate staff.