Typically,
for every two positions, at least three people need to be interviewed.As there
have not been too many executive directors who could meet both conditions, the
government relaxes one of them. It stuck to the two-year residual service
condition but decided to overlook the requirement for one-year experience.
This
fast-track promotion policy has not gone down well with many. It’s not because
relatively younger executives are set to become chiefs of banks but for the
fact that the government is following different rules for different banks at
different times and there is no uniformity in its approach. For instance, while
selecting the SBI chief, the government dropped the two-year residual service
clause. Four managing directors were called for the interview and only one of
them had more than two years of service left. The government waived this clause
and, at the same time, introduced a new one—irrespective of the years of
service left, the minimum tenure of a State Bank chairman is now three years.
In fact,
two members of Parliament have written to the government on this. One of them
belongs to the Bharatiya Janata Party and another, the Shiv Sena. I don’t know
what these two gentlemen have to do with the appointment of chiefs in public
sector banks but their letters make one point clear that such appointments
are sensitive, for politicians as well as Indian corporations who borrow from
banks. At least two executive directors in the past had told that they had
got calls from people willing to help them ahead of their interviews.
Typically, such calls are made by chartered accountants who claim to be
connected with relevant people. They do not ask for anything in return while
offering their service. Both the executive directors claimed to have not
entertained such calls as they were not willing the pay the price to the
brokers for their service.
Typically,
one is required to return the favour by giving loans to corporate houses and
individuals who would later approach the chairman through these brokers. As a
result of this, a bank may end up piling up bad assets. Such brokers also put
pressure on a chairman for restructuring bad loans. Allegations made by these
two executive directors could not be verified but the fact remains that the
government looks vulnerable when it comes to the appointment of chiefs of
public sector banks as the rules are often broken and made with the apparent
intention to accommodate certain individuals. It is extremely difficult to
prove this but one always gets the uneasy feeling that things are not done
transparently. To defend its credibility, the central bank should disassociate
itself from the process.
