Winners' curse: Top bosses at PSBs see their term ending much before time

Govt has appointed 14 EDs at public-sector banks; their performance will be reviewed after three years for a two-year extension

The appointments committee of the cabinet (ACC), which cleared the appointment of 14 executive directors (EDs) at public-sector banks late evening on Monday, said these officials would be eligible for an extension of two years after completing their three-year term, provided they passed a performance review test. This means that many bankers’ career at public-sector banks will end much before they attain the retirement age of 60.
 
All 14 EDs have been given a term of three years from the date of taking charge. Their performance will be reviewed after the end of three years, and they would get a two-year extension if the review is satisfactory. The EDs shall be “eligible for an extension of the term in office, after a review of performance, by two years, or until further orders, whichever is earlier,” the department of personnel and training said while issuing the circular of the appointments.

 
Several of the names on the list are those of bankers in the 45-50-year age group. They would likely end their career aged between 50 and 55 years, even if they passed the performance review after three years. A candidate might get a further extension only if he or she is appointed managing director and chief executive of a public-sector bank (PSB).
 

After the merger of 13 PSBs in the past two years, there now are 11 of them, excluding State Bank of India. Five banks with a total business of over Rs 10 trillion – Bank of Baroda, Punjab National Bank, Canara Bank and Bank of India and Union Bank of India – can have four EDs. Banks having a business between Rs 5 trillion and Rs 10 trillion can have three EDs. Indian Bank, after it merged with Allahabad Bank, has three EDs. Central of India also has three EDs. Those with less than Rs 5 trillion of business have two EDs. These are UCO Bank, Bank of Maharashtra, Punjab and Sind Bank and Indian Overseas Bank.

 
These 34 EDs will be eligible for a promotion as MD & CEO of public-sector banks other than SBI, which has a chairman selected from its existing MDs. This apart, 19 deputy managing directors (including MDs of SBI subsidiaries) are eligible for appointment as MD & CEO at public-sector banks; the government can even bring an outsider to helm a PSB. So, there is a tough competition for these 11 MD & CEO positions that would bring an extension of service tenure for the EDs.
 
According to public-sector bankers, in the seven years of the Narendra Modi government, a lot of top officials, including MD & CEOs, ended their career before reaching their superannuation. During the time of the United Progressive Alliance (UPA) government, all public-sector bankers were allowed to offer their services till the retirement age.

 
“It is not a good practice but it was already happening. There were EDs and CEOs under 60 whose terms were not renewed. This practice is being made more explicit in this order,” said C H Ventakachalam, general secretary, All India Bank Employees Association. “This will demotivate people from taking higher appointments,” he told Business Standard.
 
Former Punjab National Bank chairman and managing director K R Kamath, UCO Bank CMD Arun Kaun, Bank of Baroda MD & CEO PS Jayakumar, Central Bank of India MD & CEO Rajeev Rishi – all ended their career much before turning 60, the retirement age for PSB officials.

 
“While this was almost a practice, now the government has formally said that PSB officials will serve for a maximum term of five years, irrespective of their age,” said the MD & CEO of a PSB.
 
“If someone is getting promoted as ED or CEO at a young age, the person must have some special qualities,” said Sanjay Manjrekar, former general secretary of Syndicate Bank Officers Association and former senior vice-president of the All India Bank Officers Confederation. “Instead of using their experience and expertise, the government is choosing to let them go by ending their career before the retirement age.”

 
Public-sector bankers also point out that the retirement age for MDs & CEOs at private banks is 70 years, unlike at PSBs, where top-level officials are not allowed to work even till 60 years of age.
 
The 14 EDs who will be appointed at various PSBs in the next financial year are Swarup Kumar Saha (PNB), Debadatta Chand (BoB), K Satyanarayana Raju (Canara Bank), Nitesh Ranjan (Union Bank), Monika Kalia (Bank of India), Swarup Dasgupta (Bank of India), M Karthikeyan (Bank of India), Ishraq Ali Khan (UCO Bank), Vivek Wahi (Central Bank of India), S Srimathy (Indian Overseas Bank), B Vijaykumar A (Bank of Maharashtra), Raghavendra Venkatasheshan Kollegal (Punjab & Sind Bank), Rajeev Puri (Central Bank of India), and Imran Amin Siddiqui (Indian Bank).

 
The selection of these officials was made by the Banks Board Bureau (BBB), and the appointment was made by the government.