The government has once again tweaked the rules for selection of public sector banks chiefs. Now, candidates with at least 18 months of residual service will qualify.
In February this year, the finance ministry shortlisted 12 executive directors to fill top slots at 10 public sector banks. However, the PMO directive will not require the finance ministry to repeat the selection process as all selected candidates have 18 months of residual service.
"PMO partially rejected the proposal. Now, it has said that bankers with 18 months of residual service at the beginning of a financial year (April 1) can be considered. Luckily, all selected candidates fulfil this requirement. However, a candidate may have less than 18 months of residual service when a vacancy arises," a senior government official told Business Standard.
Only in case of Canara Bank, which is an A-category bank, no bank chairman from B and C category banks was meeting the eligibility criteria. So, the finance ministry had to select an executive director of a large public sector bank to head the Bangalore-based bank.
The government does not shift chiefs of large banks such as Punjab National Bank, Bank of India and Bank of Baroda to another bank in the same category. As a result, the finance ministry proposed that S Raman, who is executive director at Union Bank of India, be moved to Canara Bank as chairman and managing director.
The official, who did not wish to be named, said it would have been difficult to find the right people for the job had the government stuck to the criterion.
He said only 11 bankers would have qualified if the minimum residual service was fixed at 21 months. About 13-14 bankers qualified when the residual service was reduced to 18 months, and 16 qualified when the period was reduced to 15 months.
MV Tanksale (PNB), Nagesh Pydah (PNB), M Narendra (Bank of Baroda), H S U Kamath (Canara Bank), Pradeep Ramnath (Central Bank), Arun Kaul (Central Bank), A S Bhattacharya (Indian Bank), R Ramachandran (Syndicate Bank), S Raman (Union Bank), and B A Prabhakar (Bank of India) were shortlisted by the finance ministry for heading various public sector banks. S C Kalia (Union Bank), who was kept in stand-by, does not qualify under the new criteria.
Earlier, rules said a banker in contention for the job of a public sector bank chief should have at least two years of service left. The finance ministry relaxed this to 21 months after it faced difficulty in finding candidates who met this condition. In February this year, it reduced the period to 15 months.
While the move was necessitated as the government had to fill 10 vacancies and many bankers were not fulfiling the eligibility criteria of even 21 months, the PMO rejected the proposal because a term of less than two years did not give individuals time to implement their decisions properly.