Following the arrest of SK Jain, the then CMD of state run Syndicate Bank on alleged bribery charges and his subsequent dismissal, the selection and appointment of CMDs for Public Sector Banks has been kept in abeyance for some time now. It is also reported that CBI didn’t find the appointment process to be transparent and sent a report to that effect to the finance ministry for consideration. Consequent to this development, presently as many as six PSU Banks are functioning without a CMD (Chairman and Managing Director).

How the govt. chooses PSU bank CEOs is undoubtedly a very important issue. However, it has really been an irony that selection of CMDs in Govt. owned banks is done in a seemingly non-transparent and at times in ad hoc manner without any professional and well laid down approach as if these are purely political appointments based on whims and fancies of political masters and some bureaucrats in the concerned ministry. This almost gets vindicated if one looks at the professional competence and domain knowledge of interviewers. Do the members really qualify technically and professionally to be on the panel of such a vital selection committee?

Undeniably, it’s a common pre-requisite for any dynamic organisation to have a defined succession plan, if not feasible for all segments of staff, but at least for top management including CMDs. Further, there must be a minimum tenure of 3 years for CMDs to know, understand and effect some value addition to the continuing process of action plan and also contribute towards change management keeping in view the growth road map of any PSU Bank in today’s extremely dynamic financial market. But then, why even these important issues were not addressed?

It is a pity but a sordid fact that the questions being asked to the interviewees for selection to the apex positions are more or less the same and similar as being generally asked in PO's (Probationary Officer) or in departmental scale promotions which clearly reflects Govt's lack of professional commitment towards taking care of quality in selection even for such vital positions necessary for ensuring a sound and vibrant PSU banking in the country.

The outcome of this kind of selection process is vividly noticeable in all aspects of functioning of PSU Banks, which everyone knows, are not maintaining good health and hence require regular support from the govt. including infusion of capital in order to comply with the international norms of capital adequacy etc.

Failure to have a transparent and well laid down policy in this regard is definitely have wide ramification on all aspects of business, both top line as well as bottom line. If an expert panel goes a bit deep into the problems PSU Banks have been facing over a few decades now, whether it pertains to liability or asset management, NPA or HR management, Risk or Fund management, it can well be observed that the top management and the boards have failed to address even the important issues proactively and professionally to keep the show going and live up to the minimum expectations of the millions of stakeholders - the customers.

There is no denying the fact that PSU Banks have immense potential and opportunities too to excel in all areas of banking operations provided meritocracy gets precedence over mediocrity in days to come. It is hoped that the appointment process to fill the vacancies would be expedited by the finance ministry with professionally sound and visible improvement in the whole selection process, may be based on the recommendations of Nayak Committee or otherwise.

milan sinhaMilan K. Sinha is a freelance writer. He has worked in Banking and Insurance sector for three decades following three years of active writing in various newspapers and magazines. Presently he is engaged in stress management, wellness and awareness activities besides freelance writing.
He is located in Patna and can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it..