Appointing a PSU bank chairman

Krishnamurthy Subramanian : Live Mint :THU, NOV 20 2014. 05 25 PM IST


To stem the rot in public sector banks, the government should create a professional process for appointment 

Following the arrest of S.K. Jain, the former chairman of Syndicate Bank, the government has modified the selection process for the appointment of chairmen of public sector banks (PSBs). This process has effectively added more layers of bureaucracy in the form of three screening committees (instead of one earlier). Rather than tinkering with a failed system, and possibly making it worse, the government needs to institute a process that incorporates the best practices for the selection of the leader of a PSB.

Unlike the case of a private sector bank, where the selection process follows an extensive search that is usually handled by an executive search firm, no search process is stipulated in the case of the selection of chairmen of PSBs. A shortlist is generated based on certain demographics of general managers in all PSBs, such as age, number of years of experience as general manager, etc. This shortlist is then screened for potential cases of corruption or vigilance enforcement. The shortlisted candidates are interviewed usually for 15-30 minutes before a decision is made on the eventual candidate. Given the difficulty in judging the candidate in such a short span of time, rumours abound about the outcome being pre-decided based on political affiliations/extraneous reasons.

Several aspects of the current process render it sub-optimal. First, government officers and regulators are unlikely to possess the skills necessary to judge the potential talent necessary for someone to lead a bank with assets of Rs.5 trillion or more. Banking is a very specialized activity, and top management needs to combine strategic foresight with a good commercial knowledge of sectors to lend to, prudent risk management and human resource skills. For highly skilled activities, selection by a peer group generally ensures that those who select have the ability and discernment to assess the required attributes.

For example, if the selection of the Indian cricket team for the forthcoming cricket World Cup is left in the hands of the Board of Control for Cricket in India (BCCI) administrators rather than the selection committee comprising former cricketers, one can only shudder to think about the potential performance of the team. Just like a cricketer representing the national team requires special skills, the chairman of a PSB also needs enormous skills of leadership, persuasion, risk management, people management, etc. Former cricketers who have played the game at the top level comprise the selection committee for the Indian cricket team. Similarly, only someone who has been the chief executive officer of a large bank can understand the skills required for the job. No bureaucrat, politician or regulator can possess the skill to judge whether or not a particular candidate has the necessary ability. The current perception that the selection by such a peer group is unnecessary for top management positions in PSBs fails to recognize the specialized nature of banking and (in the context of government appointments) lends itself more easily to abuse.

Second, the way the selection committee is presently constituted leads to inadequate interaction with the shortlisted candidates. Consider the process of appointment of assistant professors in research-oriented universities. Because research requires application of diverse skills, a prospective candidate spends an entire day meeting and interacting with every research-oriented faculty in the department for 30 to 45 minutes. The one-on-one interaction provides multiple opportunities for each individual faculty to evaluate the candidate. A follow-up discussion where each individual faculty shares his/her assessment of the candidate leads to a rich assessment of the candidate’s attributes. Similarly, interactions with each member of a selection committee, comprising former bankers, would better assess the potential for leading a bank.

The Nayak committee’s recommendations in this context are worth considering. Till the time that the boards of PSBs are professionalized, the committee recommended setting up of a Bank Boards Bureau (BBB), which would advise on top bank management selection. BBB will comprise senior or retired commercial bankers. It should ideally comprise a compact set of three bankers, of whom one would be the chairman. As this would be a full-time position, serving bank officers would need to resign, if chosen. For the process to carry credibility, it is important that the chairman and members be of high standing and should have led banks. Their choice should be made by the government in consultation with the Reserve Bank of India (RBI). As the appointments to the top management of banks will continue to require the concurrence of the appointments committee of the cabinet, it is desirable that BBB’s recommendations be generally accepted by the government. In cases where the BBB’s recommendations are not followed, BBB should be mandated to make a public disclosure of recommendations that were rejected by the government.

To stem the rot in PSBs, the government would be well advised to create this professional process for appointment of top management in the PSBs. Given the precarious position of PSBs and the substantial amount of capital that the government may have to provide in the next five years, such a step has become a sine qua non.

Krishnamurthy Subramanian teaches finance at the Indian School of Business and was a member of the P.J. Nayak Committee on governance of bank boards.

Subhash Chandra Garg appointed as World Bank ED

B L 10 SEP 14

Senior IAS officer Subhash Chandra Garg was today appointed as Executive Director (ED) in World Bank.

Garg, a 1983-batch IAS officer of Rajasthan cadre, will have a tenure of three years from the date of assuming charge of the post, said an order issued by the Appointments Committee of Cabinet (ACC).

The Executive Directors are responsible for the conduct of the general operations of the World Bank and exercise all the powers delegated to them by the Boards of Governors. They also select a President who serves as Chairman of the Boards.

They are responsible for International Bank for Reconstruction and Development’s loans, guarantees and policies that impact the World Bank’s general operations among others.

Garg is presently serving in Rajasthan.

The ACC had last month approved the proposal for extension of tenure of M N Prasad, a 1972 batch IAS officer of Bihar cadre (retired), as Executive Director, World Bank till October 31.

The order for Prasad’s appointment was issued on July 26, 2011 for three years. Prasad was then working as Secretary to former Prime Minister Manmohan Singh.

Karnataka Bank appoints new additional director

BL 8 Sep 2014

Karnataka Bank Ltd has appointed BA Prabhakar, former Chairman and Managing Director (CMD) of Andhra Bank, as an Additional Director of the bank.

The bank informed the BSE on Monday that the board, which met on September 6, has appointed Prabhakar as an Additional Director of the bank.

Prabhakar, a chartered accountant, retired as CMD of Andhra Bank in August 2013. Prior to that, he had served as the Executive Director of Bank of India from October 2008 to December 2011. Before that, Prabhakar had served Bank of Baroda from October 1977 to October 2008, the statement said.

RBI says 70 years upper age for private bank CEOs, whole-time directors

Following this notification, nobody will be allowed to continue as a director in private sector banks beyond the age of 70.

Joel Rebello Mint 9 Sep 2014

The change has been done in light of provisions in the Companies Act, 2013 

Mumbai: The Reserve Bank of India (RBI) on Tuesday capped the maximum age till which a person can continue to be managing director, chief executive officer or a whole time director in a private sector bank at 70 years.

Previously there was no such age limit for directors. The change has been done in light of provisions in the Companies Act, 2013, which says, “No company shall appoint or continue the employment of any person as managing director, whole time director or manager who is below the age of 21 years or has attained the age of 70 years,” RBI said.

Following this notification, nobody will be allowed to continue as a director in private sector banks beyond the age of 70. However, bank boards are free to prescribe a lower retirement age for whole time directors and CEOs as an internal policy, RBI said.

Govt to review senior public sector bank appointments

TNN 14 Aug14

NEW DELHI: The finance ministry has decided to take a relook at recent appointments of top-level public sector bank executives as well as a clutch of proposals to designate chairmen just before the UPA demitted office, in what is seen as a direct fallout of the recent arrest of the Syndicate Bank chief by CBI on alleged corruption charges.

Senior finance ministry officials told TOI that a review has become necessary in view of the irregularities that have come to light.

Finance minister Arun Jaitley has written to the Reserve Bank of India governor Raghuram Rajan, who heads the appointment board that selects state-run bank chiefs, as well as cabinet secretary Ajit Seth, who processes all papers for the appointments committee of cabinet, sources said. Some of the appointments processed during UPA's closing days lacked transparency and there are indications that some political considerations may have played a part, they added.

In a letter to the finance ministry, CBI chief Ranjit Sinha has pointed to some irregularities that have been noticed by the investigative agency during the Syndicate Bank probe. Sources said CBI has suggested a "legal scrutiny" as it has found clues suggesting that ACRs and interviews "were managed" and some middlemen also played a role.

Sinha said Jain was appointed despite having "poor" ACRs. "We have told the government that appointments deserve to go under legal scrutiny. The government has to take a call. There are reports of irregularities in several appointments. We have informed the government about it," the CBI chief said.

For the past few years, appointment of several bank chiefs, executive directors as well as independent directors have been viewed with a degree of suspicion and have often resulted in controversy. The candidates are selected on the basis of an appraisal of the confidential reports (ACRs), which carry 70 marks, and candidates appearing for interviews for executive directors and CMDs can get another 30 marks. Apart from the RBI governor, financial services secretary, an RBI deputy governor and external experts are part of the appointments board.
Similarly, there is no clarity on what goes into deciding the allotment of banks.

There have been instances of some of the candidates barely opening their account in the interviews but still being recommended for appointment based on their ACRs. In 2012, while appointing a second-rung executive, the department of financial services was accused of changing the grades from "very good" to "outstanding", making the executive eligible for the job. Once the gap was pointed out, the appointments committee of cabinet had put the appointment on hold, but later cleared it.

On several occasions, the department of financial services has changes the criteria for appointment. For instance, to become a public sector bank CMD, the candidate should have been an executive director for at least two years and should have at least two years to go for retirement. Often these stipulations have been tweaked.

For instance, this January, as reported by TOI, the government allowed general managers of public sector banks who had less than the stipulated three years to go for superannuation to appear for an interview. This allowed five candidates to appear for the interview at a notice of just a few hours. The exercise to com,plete the selection 13 EDs came weeks before election were announced and on the Anand Sinha was to demit office as RBI deputy governor.

But what really attracted attention in the corridors of ministries was the UPA government's decision to interview candidates for bank chiefs late last year even when the first vacancy was not arising till this August. Another talking point was the cut-off date of August 6 for fixing the eligibility, which usually is the first or the last day of the month. The unusual date and the relaxation in the two-year retirement norm expanded the field to 19 candidates, compared to eight who would have been eligible if the rules were not tweaked.

Around the same time, the appointments board had called only one candidate for an interview for the job of a managing director in State Bank of India, the country's largest bank.
Link times of India

RBI deputy guv appointment hits FinMin wall

 B S  :Manojit Saha  |  Mumbai  January 11, 2014 Last Updated at 00:46 IST


Traditionally, two of four deputy governors are promoted from within ranks of RBI

The appointment of a deputy governor (DG) in the Reserve Bank of India (RBI) has hit a hurdle, with the finance ministry conveying its reservations on the name proposed by the search panel.

A search committee headed by RBI Governor Raghuram Rajan had called all nine executive directors (EDs) of the central bank for an interview. 

Eight of them appeared; S Karuppasamy, an ED in charge of urban banks and information technology, declined.

 Sources indicate the panel recommended a fairly junior ED on the list. Though seniority is not the criterion, it appears top ministry officials have questioned the need to go so far down. 

Among the EDs, G Gopalakrishna, who looks after the banking supervision department, is the seniormost.

Top ministry officials met the RBI governor recently to convey the view and how to break the impasse.

One of the four DG posts  would fall vacant on January 18, when Anand Sinha retires. He is coordinating the process for issue of new bank licences and is likely to be redesignated officer on special duty, to guide its completion. Apart from banking operations and development, Sinha also looks after non-banking supervision and urban banks risk monitoring, among others.  He became a DG in January 2011, for a two-year term.

A DG can be appointed for five years or till the age of 62, whichever is earlier. To be eligible, one needs to be less than 60 years. However, there were instances when both conditions were relaxed.

The central bank has four DGs. Traditionally, two are promoted from within the RBI ranks, another is an economist and the fourth from among commercial banks. The other DGs now are K C Chakrabarty, H R Khan and Urijit Patel.

Chakrabraty was a commercial banker; he will retire in June, after completing five years in RBI.

Khan’s three-year term will get over in July and he is eligible for a two-year extension.

Usha Ananthasubramanian takes charge as CMD of Bharatiya Mahila Bank

Live Mint : PTI :12 Nov 2013

In a career spanning over 31 years, Ananthasubramanian has worked in various positions in banking and allied areas

New Delhi: The government on Tuesday appointed Usha Ananthasubramanian as the chairperson and managing director (CMD) of Bharatiya Mahila Bank, the first all-women bank. Ananthasubramanian assumed charge on Tuesday, Bharatiya Mahila Bank said in a statement.

She started her career in the actuarial department with Life Insurance Corp. of India (LIC) and her banking career in February 1982 as a specialist officer in the planning stream of Bank of Baroda. Before joining Bharatiya Mahila Bank, she was an executive director with Punjab National Bank(PNB).

In a career spanning over 31 years, she has worked in various positions in banking and allied areas. At PNB, she was a part of the committee formed for examining the blueprint and other issues related to setting up the women’s bank. The report was prepared based on the terms of reference given to it by the finance ministry and was submitted within the stipulated time, which paved the path for the India’s first public sector women’s bank to be headquartered in Delhi.

Subsequently, she was nominated as leader of the core management team constituted by the finance ministry for coordinating the process of establishment of the women’s bank.

The Reserve Bank of India gave its in-principal approval for the Bharatiya Mahila Bank in June and the banking company was set up.

The government approved Rs.1,000 crore seed capital for the women-focused public sector bank, announced by finance minister P. Chidambaram in his budget speech. One of the key objectives of the bank is to focus on the banking needs of women and promote economic empowerment. 

FinMin shortlists EDs for top job in six govt banks

 

BS Reporter  |  Mumbai  

November 7, 2013 Last Updated at 23:26 IST]]

Ashwini Kumar may move to BoB; Six EDs identified to fill up vacancies in FY15

The Union finance ministry has shortlisted the names of executive directors (EDs) likely to head public sector banks (PSBs) in 2014-15.

Six PSBs will see its chairmen and managing directors (CMDs) retiring in 2014-15 -- Bank of Baroda (BoB), Indian Overseas Bank (IOB), Canara Bank, Oriental Bank of Commerce (OBC), Vijaya Bank and United Bank of India.

The selection panel of, among others, Anand Sinha, deputy governor, Reserve Bank of India and Rajiv Takru, secretary, financial services in the ministry of finance, interviewed 19 EDs last week.

Sources indicate Arun Srivastava, an ED in Bank of India has been identified to head IOB, S K Kalra of Andhra Bank might get the charge of Canara and B B Joshi of BoB might head for OBC. R K Goel of Central Bank of India might get Vijaya Bank and M K Jain of Punjab & Sind bank  may get the top job in Kolkata-based United Bank.

Aswini Kumar, who is CMD of Dena Bank, might get a chance to lead BoB, as the finance ministry is contemplating a return to the process of lateral transfers. The system of appointing CMDs in small PSBs to larger ones had been stopped since last year. The vacancy at Dena Bank will then be filled by Arun Tiwari, an ED at Allahabad Bank.

For the present round of selection, the ministry had relaxed the norms for selection of CMDs. The norm that a candidate needed to complete a year as ED to become eligible was relaxed. However, the criterion for residual service of two years of a candidate remained.

The first vacancy will come only in August 2014, after the general elections, when the BoB and IOB top posts become vacant. Though the candidates have been identified, clearance from the Central Vigilance Commission can only be had a month or two prior to the appointment.

THE HOT SEAT
Six PSBs whose chairmen and managing directors are retiring in 2014-15

* Bank of Baroda
* Indian Overseas Bank
* Canara Bank
* Oriental Bank of Commerce
* Vijaya Bank
* United Bank of India

Meet Arundhati Bhattacharya, SBI’s first woman chairperson in 207 years

Arundhati Bhattacharya joins the expanding list of women who are now leading financial institutions in the country
FP Staff Oct 8, 2013

Only a few powerful women have made it to the top at Indian banks and the latest entrant to this elite list is SBI’s Arundhati Bhattacharya.

Bhattacharya has been appointed the first woman chairperson of the 207-year-old State Bank of India which is India’s largest commercial bank.

On Monday, the  government  cleared the elevation of Bhattacharya for the top job.  She was among four contenders for the top job. The others were SBI MDs – Hemant Contractor, A Krishna Kumar and S Viswanathan. But longer residual service clinched the decision in her favour.

Bhattacharya  succeeds Pratip Chaudhuri who retired on 30 September.

She will join the  likes of Chanda Kochhar, MD and CEO of ICICI Bank; Shikha Sharma, MD and CEO, Axis Bank; Naina Lal Kidwai, country head, HSBC; Kaku Nakhate, president and country head (India), Bank of America Merrill Lynch, Vijayalakshmi Iyer, CMD, Bank of India; Archana Bhargava, CMD, United Bank of India and Shubhalakshmi Panse, CMD of Allahabad Bank.

Here is all you need to know about Arundhati Bhattacharya

1. Fifty-seven year old Bhattacharya is the bank’s 24th chairperson and has a two-and-a-half-year term at the top. She joined SBI as a direct recruit officer in 1977 and in the course of her extensive service, has served in metros as well as urban and rural areas, criss-crossing the length and breadth of the country.

Earlier, she was managing director and chief financial officer of SBI. In her earlier roles, she was deputy managing director and corporate development officer of SBI.

According to SBI, she was also involved in setting up several new companies and initiatives of the bank, including SBI General Insurance, SBI Macquarie Infrastructure Fund and SBI SG Global Securities Services, as well as the launch of IT platforms such as mobile banking.

As corporate development officer and deputy managing director, she has handled large corporate credit as well as initiatives like financial inclusion and financing of self-help groups.

2. During her 36 years at SBI, she also had a stint in the Bank’s New York office where she was in charge of monitoring branch performance, overseeing external audit and correspondent relations.

3. According to the Times of India, Bhattacharya is the first woman to ever lead a Fortune 500 company in India, and the only woman banker on that list of giants anywhere in the world.

4. This is the first time that an SBI chief will get a three-year tenure —  the first time that any SBI chairperson is getting such a fixed term— irrespective of when the person will retire.

However, she is taking charge at a time when the bank is battling rising bad loans as borrowers find it difficult to meet repayment obligations in a slowing economy. Her biggest challenge will be to improve the bank’s worsening asset quality. The bank’s non-performing assets were 5.5 percent of all assets in the June quarter. Net profit in the first quarter fell 13.6 percent to Rs 3,241 crore against Rs 3,751 crore in the same quarter last year.

In an interview with Times of India, Bhattacharya had  listed capital efficiency, improvement in productivity, investor relations and overall liquidity management as her priorities.

5. “She has a collaborative leadership style, which will help her in dealing with trade unions, which the former chairman faced problems with,” an SBI official was quoted as saying about Bhattacharya by theBusiness Standard.  Still, some SBI officials  told Mint that Bhattacharya lacks the experience of working at the corporate office as she has “spent most of her career outside headquarters”. Whether she will be able to  restore the confidence of investors who have dragged down SBI’s share price in recent weeks remains to be seen. As of now, we should just welcome Arundhati Bhattacharya who joins the expanding list of women who are now leading financial institutions in the country

New banking Ombuddsman for TN wef 30th Sep 2013

Mr U Chiranjeevi will be the banking ombudsman for 
Tamil Nadu, Puducherry except Mahe region 
and Andaman & Nicobar Islands 
witheffect from September 30,2013 
according to a Press Release.

He takes over from Sujatha E Prasad

SBI MDs to look after their depts till new chief's appointment

PTI : ET : 1 ct 2013

NEW DELHI: State Bank of India (SBI) today said all four managing directors will continue to exercise their respective powers, pending the appointment of a chairman at the country's largest lender.

"All managing directors will continue exercising their respective powers asmanaging director while the financial and administrative powers of the chairman shall be exercised with the approval of the board of directors or management committee of the bank," SBI said in a statement.

The arrangement will continue till a chairman is appointed by the government, it said. The post of chairman fell vacant following the retirement of Pratip Chaudhuri yesterday.

On September 21, a government-appointed panel interviewed all four SBI managing directors for the post of chairman. It is understood that Arundhati Bhattacharya is the front-runner.

The Appointments Committee of the Cabinet (ACC), headed by the Prime Minister, had recently suggested that all four SBI MDs should be called for the interview.

The ACC comprises of the Home Minister and the administrative ministry in-charge, which in this case is the Finance Ministry.

The Finance Ministry had sought exemption in regulatory guidelines so that more candidates could be interviewed for the SBI's top post.

As per norms, a candidate for the chairman's post must have at least two years of service left before retirement to qualify for the interview. Going by this rule, only Bhattacharya was eligible.

While Bhattacharya, who was recently elevated as MD, will retire in March 2016, Managing Director A Krishna Kumar has one year and three months left before he retires in November next year.

4 GMs elevated as Executive Directors in PSBs

bl :NEW DELHI, SEPT 28: 2013

The Centre has elevated four General Managers in various public sector banks to the post of executive directors.

B.S.Rama Rao, who was General Manager at Andhra Bank, has been appointed as Executive Director at Vijaya Bank.

The Centre has appointed Mahesh Kumar Jain, who was General Manager at Syndicate Bank, as Executive Director of Indian Bank.

Atul Agarwal, who was General Manager at Central Bank of India, has been appointed as executive director of Indian Overseas Bank.

All these appointments will come into effect immediately.

R.K.Takkar, who was General Manager at Oriental Bank of Commerce, has been appointed as executive director at Dena Bank.

He will assume charge of his new role in February next year.

Shri Melwyn Rego appointed as Deputy Managing Director of IDBI Bank

For Immediate Publication / Broadcast / Telecast

Shri Melwyn Rego appointed as Deputy Managing Director of IDBI Bank

Mumbai, September 3, 2013:  Shri Melwyn Rego, Executive Director, IDBI Bank Ltd., has been appointed as Whole-Time Director, designated as Deputy Managing Director, on the Board of Directors of IDBI Bank Ltd. by the Government of India for a period of 5 years. 

Shri Rego is currently looking after Infrastructure Corporate Group, Project Appraisal Department, Debt Syndication, Structuring & Advisory Department, Treasury and International Banking.   He is also a Member of several committees of the Bank including the Credit Committee, Systems & Procedures, Products & Staff Suggestions Committee, Investment Committee, Asset Liability Management Committee etc.

Shri Rego has served IDBI Bank in various positions from 1984 till date.  From September 2003 to December 2007, Shri Rego was CEO & Managing Director of IDBI Homefinance Ltd.  In January 2008, he took over as Head-International Banking Division to spearhead IDBI Bank's overseas initiatives.   Shri Rego has extensive international experience and was a rank holder at a programme on International Capital Markets at Oxford University, UK.  He has also participated in several seminars including those organized by EDI/World Bank at Washington.

Shri Rego is a B.Com from BMCC College, Pune and an MBA from Symbiosis Institute of Business Management, Pune.  He is a keen sportsman and has a passion for music and dramatics.          

About IDBI Bank

IDBI Bank is the youngest, new generation public sector universal bank that rides on a cutting edge Core Banking Information Technology platform. This enables the Bank to offer personalized   banking and financial solutions to its clients through its 1141 branches and  1892 ATMs. The Bank has an aggregate balance sheet size of Rs.2,87,790 crore and total business of Rs.3,62,222 crore as on June 30, 2013. IDBI Bank's operations during the Quarter ended June 30, 2013 resulted in a net profit of Rs.307 Crore. IDBI Bank earned a net profit of Rs.1882 crore during the financial year ended March 31, 2013.

11 GMs elevated as Executive Directors of various PSBs

BL :NEW DELHI, AUG. 6: 2013

 

In a significant move, the Centre has elevated as many as 11 General Managers to the posts of Executive Directors in various public sector banks.

The orders for the promotion of these 11 senior bank officials have been issued, sources in the Finance Ministry said.

The list of General Managers and the banks to which they have been posted as Executive

Directors is as follows::

Rakesh Sethi, currently General Manager at Bank of India, has been appointed as Executive

Director of Union Bank of India.

Animesh Chauhan, General Manager at Bank of Baroda, has been appointed as an

Executive Director at Central Bank of India.

K.K. Sansi, who was General Manager at Oriental Bank of Commerce, has joined Punjab & Sind Bank as an Executive Director.

Krishna Guha has joined Dena Bank as an Executive Director. Prior to this elevation, she was General Manager at Allahabad Bank.

P.S. Rawat will move from Bank of India, where he was a General Manager, to Canara Bank as an Executive Director.

Arun Srivastava has been appointed as an Executive Director at Bank of India. Prior to this elevation, he was General Manager at Bank of Baroda.

R. Koteeswaran has been appointed as an Executive Director at Bank of India. He is currently General Manager at Bank of Baroda.

While Mukesh Jain will move from Dena Bank to Punjab & Sind Bank as Executive Director, B.B. Joshi has been appointed as an Executive Director at Bank of Baroda. Joshi is currently a General Manager at Bank of India.

Jaikumar Garg has been appointed as Executive Director at UCO Bank. He was General Manager at Corporation Bank.

T.K. Srivastava, who is currently General Manager at Union Bank, has been appointed as an Executive Director in Syndicate Bank.