This is for filling a slew of vacancies, which will be created at the top in the banking industry over the next few months.
Currently, an ED needs to put in a minimum of one year in order to be considered for the post of chairmanship. The finance ministry is planning to reduce the minimum period to six months.
The top slot in at least six major public sector banks will fall vacant in 2005. If the one-year norm is changed, some of the existing executive directors of banks may be promoted for the top job.
The major banks whose CMDs are set to retire in 2005, include S S Kohli of Punjab National Bank, M Venugopalan of Bank of India, P S Shenoy of Bank of Baroda, B D Narang of Oriental Bank of Commerce, Dalbir Singh of Central Bank of India and V K Chopra of Corporation Bank.
Chandan Bhattacharya, managing director of State Bank of India, will also retire soon.
If the new norm does fall in place, the entire new crop of EDs H A Daruwalla of Oriental Bank of Commerce, M V Nair of Dena Bank, K C Chakravarthi of Punjab National Bank, K V Ramkrishnan of Bank of Baroda and M Balachandran of Bank of India, will become eligible to become CMDs.
Recently, there has been a change in the eligibility criterion of the CMDs of banks and MDs of State Bank of India. The new rules stipulate that a candidate must have a minimum residual service of three years to be appointed as a CMD.
Earlier, the minimum residual service stipulation was that of two years. A CMD retires at the age 60.
The new lot of CMDs of public sector banks will have a critical task in hand as some of them will have to manage mega mergers as consolidation is becoming the name of the game in the sector. In the event of mergers, HR issues will be of primary importance.
The experience gained from the proposed Bank of India-Union Bank of India merger will decide the roadmap for consolidation in the Indian banking space.