It looks like none of the private sector bankers could make it to the final list. I understand that the appointment committee has picked senior public sector bankers to head five relatively large state-owned banks for a three-year fixed tenure from a list of 26, which featured at least seven representatives from the private sector.
The five successful candidates, according to a couple of people familiar with the selection process, are Usha Ananthasubramanian, chairman and managing director (MD) of Bhartiya Mahila Bank; M.O. Rego, deputy MD of IDBI Bank Ltd; Kishore Piraji Kharat, executive director (ED) of Union Bank of India; M.K. Jain, ED of Indian Bank; and R.K. Gupta, ED of Bank of Maharashtra.
They will move to head Punjab National Bank, Bank of Baroda, Bank of India, IDBI Bank and Canara Bank even as finer details of who will be heading towards which bank are not known at this point. A formal announcement is expected in the next few days and I don’t entirely rule out one or two changes when the list is out.
Some 26 bankers were shortlisted for the final interview conducted by three committees at the Reserve Bank of India (RBI) headquarters in Mumbai last week. A couple of deputy general managers were in the fray by virtue of heading regional rural banks but they could not make to the final list of 17, which had senior bankers from Deutsche Bank AG, Axis Bank Ltd, Exim Bank, Lakshmi Vilas Bank Ltd and payment gateway First Data as well as a non-bank like Gneiss Corporate Solutions Pvt. Ltd, which offers value-added financial services under the Hamara Bank brand, among a few others.
Three two-member panels interviewed them over two days last week. Hasmukh Adhia, secretary of the department of financial services in the ministry of finance, and Shubhalakshmi Panse, former chairperson and managing director of Allahabad Bank, constituted the first panel; RBI deputy governor R. Gandhi and Indian Institute of Management-Indore director Rishikesha T. Krishnan were on the second panel; and former managing director of State Bank of India S. Viswanathan and an additional secretary from the department of personnel and training were members of the third panel. The final selection of candidates is made by the appointment board chaired by the RBI governor, based on the weighted average marks given by each sub-committee to ensure objectivity and transparency.
Early this year, the government split the top position in public sector banks. It was decided that there would be a non-executive chairman to guide the boards of such banks while the day-to-day management would be looked after by an MD and chief executive officer (CEO). In sync with this, the new heads of state-run banks appointed in the past few months are called MD and CEO.
Making a deviation from the usual appointment process, where EDs are promoted to head banks, being picked up by an appointment committee of the finance ministry, the government scouted for talent from the open market for the chiefs of the so-called category I banks, which have a balance sheet size of at least Rs.3 trillion each.
Initially, the government looked for candidates not more than 55 years old and with at least three years of board-level experience, but since the response was muted, the government relaxed the eligibility criteria. While the age limit was increased to 57 years, the mandatory board-level experience for the applicants was reduced to one year. This is the first time when executives from private sector banks were part of the selection process for top jobs in state-owned banks. However, since the compensation package is not lucrative, there were not many applications from the private sector.
If the government cares for reforms in public sector banks, the best way to do it is offering market-related salaries and making the CEOs accountable to the board. This, however, in no way suggests that the chosen candidates are not talented or are unfit for the assignment.
