Top appointments in public sector banks are expected to be reviewed by the new finance minister, P Chidambaram.
This follows the selection committee promoting executive directors (EDs) as chairmen and managing directors in large public sector banks.
According to banking industry sources, the finance ministry wants to discuss the issue of appointing EDs as chiefs in large public sector banks, as this was a departure from the tradition of lateral movement.
Traditionally, chairmen and managing directors of smaller government-owned banks are given the top job in larger banks.
EDs were promoted to head institutions such as Bank of Baroda, Canara Bank and Bank of India, all large banks in which earlier, lateral movement was followed.
EDs of Union Bank of India, Central Bank of India and Canara Bank were scheduled to take charge in these three banks.
The recommendations of the appointment board, headed by the governor of the Reserve Bank of India, were sent to then finance minister Pranab Mukherjee.
However, the file was sent back to the appointment committee, after stiff opposition from some bank chairmen, who raised the matter with the top echelons of the finance ministry. The board, however, stuck to its stand of no lateral movement.
According to banking industry sources, some EDs scheduled to take over as chiefs of large banks have residual service periods less than some chairmen and managing directors of small banks.
This may have prompted the finance ministry to revisit the issue, said a source.
There are no clear rules regarding the eligibility criteria for a bank chairman and managing director.
However, traditionally, a candidate with two years of residual service is considered, though this norm has been relaxed in the past.
In case the finance ministry sticks to the lateral movement policy, the chairmen and managing directors of Indian Bank, Indian Overseas Bank and UCO Bank would be in the reckoning for top jobs at large banks.
During Mukherjee’s term as finance minister, appointments of public sector bank chiefs were fast-tracked and notifications regarding appointments were issued long before a post became vacant.
This was aimed at avoiding unnecessary delay in public sector bank appointments.
