The appointments will be for 3 years or till the date of superannuation, which ever is earlier.
For the first time, PSU banks will have a non-executive chairman, giving operational responsibility to managing director and chief executive officer.
"The procedure for selection of part-time chairman would be announced shortly," said a Finance Ministry statement.
While R Koteeswaran, Executive Director, Bank of India has been appointed as MD and CEO of Indian Overseas Bank, Animesh Chauhan, executive director, Central Bank, will head Oriental Bank of Commerce.
Kishore Kumar Sansi, who is currently ED (Punjab and Sind Bank), will be the new MD and CEO of Vijaya Bank while P Srinivas moves from Bank of Baroda to United Bank of India as MD and CEO.
The appointments will be for three years or till the date of superannuation, which ever is earlier, the statement said.
The ministry, however, said the current structure at country's largest lender State Bank of India which is headed by a Chairman and assisted by several Managing Directors, will continue.
The government did not name a replacement for Syndicate bank CMD S K Jain, who was suspended following his arrest in an alleged graft case.
"The appointment in one more bank i.e. Syndicate Bank is still under consideration of the government and it would be decided very shortly," the statement said.
After apparently not finding suitable candidates, the government now wants to widen the search for three large banks -- BoB, Punjab National Bank and Canara Bank -- by seeking talent from private sector.
"For three 'A' Category Large Banks, i.e. Bank of Baroda, Punjab National Bank and Canara Bank, the government has decided to go for a fresh selection procedure to widen the search of candidates.
“The procedure for this would be announced shortly," the statement said.
Finance Ministry said, henceforth, at PSBs other than SBI, the Chairman will be a part time Board Member who would preside over the Board Meetings and will not be an executive chairman.
"In a significant departure from the past practice, the government of India has decided to now separate the post of Chairman and MD & CEO," the statement added.
CMDs of PSU banks were so far selected from public sector banks only.
The Finance Ministry said the appointments were made based on the recommendations of Appointments Board chaired by the Reserve Bank of India Governor Raghuram Rajan.
The post of Chairman and Managing Director of Bank of Baroda is vacant since since July 31, while Punjab National Bank and Canara Bank are headless since October this year.
In PSBs, so far the top executive was designated as CMD, with the exception of the largest lender State Bank of India, where the top position is commanded by the Chairman and there are four managing directors with clearly defined executive roles under them.
The posts of Chairman and MD in the private sector are held separately.
RBI had set up a committee under the chairmanship of A S Ganguly in 2004-05 to study the issue of bifurcation of the post of Chairman and Managing Director in banks. The panel had recommended the bifurcation. Private sector banks in 2007 implemented this recommendations.
Earlier, bifurcation of the CMD's post was also suggested by Reserve Bank to the Finance Ministry. RBI had contented that CMDs of public sector banks enjoy absolute power along with boards.
The central bank had also said CMDs often dominate the board during their tenure and therefore it also recommended that the post of CMDs be separated to empower the board.
While the recommendation had been pending with the government for years, the arrest of Syndicate Bank CMD S K Jain in August for allegedly receiving a bribe of Rs 50 lakh
to enhance credit limits of Bhushan Steel and Prakash Industries, brought the issue to the fore again.
Besides, some officials of Oriental Bank of Commerce and Dena Bank were suspected of misappropriating funds worth Rs 436 crore (Rs 4.36 billion) from their fixed deposit customers.
Image: A PSU bank. Photograph: Reuters
The image is used for representational purpose only
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