India signals private-sector bosses could run state-owned banks

India, which is seeking new chief executives for five state-run banks that are currently without a permanent leader or have a departing boss, has for the first time appealed for private-sector applicants to step forward.

The government, which is trying to reform the country's banking sector, said on Thursday both public- and private-sector candidates could apply to run Bank of Baroda, Bank of India, Punjab National Bank, Canara Bank and IDBI Bank.

India usually picks bank bosses from the ranks of state-owned lenders, which dominate the sector with an over 70 per cent share of the country's banking assets. They have, however, lagged private-sector rivals in profitability and amassed bad loans at a faster pace.

The candidates need to have 15 years of mainstream banking experience with at least three years in board-level roles. The salary package will be "flexible", the government said.

But bankers say remuneration is the biggest hurdle for the government to attract private-sector talent as it is often a fraction of what top executives in private banks earn.

In December, the government said it would separate the role of chairman and chief executive in state-run lenders. It also plans to install non-executive chairmen to beef up governance.

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