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The Prime Minister’s Office (PMO) has turned down a finance ministry proposal to allow bankers with less than two years of residual service to be appointed as public sector bank chiefs.
The move will affect several candidates in race for top posts of banks
Sources close to the development said PMO was against dilution of appointment norms, which have been in place for several years and have coincided with the re-emergence of public sector banks as strong players in the banking space.
The sources said a term of less than two years did not give individuals time to implement their decisions properly.
Following the feedback from South Block, the finance ministry has prepared a fresh set of names and sent them to the Appointments Committee of Cabinet (ACC).
PMO’s objections come at a time when some lawmakers have written to Finance Minister Pranab Mukherjee expressing concerns over the proposal to allow executive directors with 18 months of residual service to be considered for appointment as bank chiefs. The members of Parliament said the decision was taken unilaterally by the finance ministry and ACC’s approval was not taken.
They said since 2007, the government had followed ad-hocism in appointment of bank chiefs and not followed a uniform set of rules. For the interviews conducted in February, the government kept changing norms, so much so that some candidates from State Bank of India, who were called for the meeting, were dropped at the last moment.
Interestingly, because of this intervention by PMO, a long tradition of appointment of chairmen of government banks has been broken. Traditionally, appointments at large banks are done through lateral movement, that is, the chairman of a smaller bank takes charge of a big bank. However, for Canara Bank’s top job, the government has decided to promote an existing executive director because present chairmen of smaller banks do not meet the two criterions, that is, two years of residual service and one-year experience as chairman of a smaller bank.
Union Bank’s S Raman is scheduled to take charge of Canara Bank when the present chief, A C Mahajan, retires in July. For six large banks, Punjab National, Bank of Baroda, Canara Bank, Bank of India, Union Bank of India and Central Bank of India, the system of lateral movement has been followed.
The sources said the finance ministry sought consent from eight candidates for appointment in as many number of banks where top positions would be vacant till February next year.
Apart from Canara Bank, the government has sought consent from candidates for appointment as chiefs of Corporation Bank, Andhra Bank, Indian Overseas Bank, Uco Bank, Oriental Bank of Commerce, Bank of Maharashtra and Vijaya Bank. Except for Vijaya Bank, where the post will be vacant in February, the top posts in seven other banks will be vacated in 2010.
The government has also sought consent from 11 general managers for the position of executive directors in nine banks
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The move will affect several candidates in race for top posts of banks
Sources close to the development said PMO was against dilution of appointment norms, which have been in place for several years and have coincided with the re-emergence of public sector banks as strong players in the banking space.
The sources said a term of less than two years did not give individuals time to implement their decisions properly.
Following the feedback from South Block, the finance ministry has prepared a fresh set of names and sent them to the Appointments Committee of Cabinet (ACC).
PMO’s objections come at a time when some lawmakers have written to Finance Minister Pranab Mukherjee expressing concerns over the proposal to allow executive directors with 18 months of residual service to be considered for appointment as bank chiefs. The members of Parliament said the decision was taken unilaterally by the finance ministry and ACC’s approval was not taken.
They said since 2007, the government had followed ad-hocism in appointment of bank chiefs and not followed a uniform set of rules. For the interviews conducted in February, the government kept changing norms, so much so that some candidates from State Bank of India, who were called for the meeting, were dropped at the last moment.
Interestingly, because of this intervention by PMO, a long tradition of appointment of chairmen of government banks has been broken. Traditionally, appointments at large banks are done through lateral movement, that is, the chairman of a smaller bank takes charge of a big bank. However, for Canara Bank’s top job, the government has decided to promote an existing executive director because present chairmen of smaller banks do not meet the two criterions, that is, two years of residual service and one-year experience as chairman of a smaller bank.
Union Bank’s S Raman is scheduled to take charge of Canara Bank when the present chief, A C Mahajan, retires in July. For six large banks, Punjab National, Bank of Baroda, Canara Bank, Bank of India, Union Bank of India and Central Bank of India, the system of lateral movement has been followed.
The sources said the finance ministry sought consent from eight candidates for appointment in as many number of banks where top positions would be vacant till February next year.
Apart from Canara Bank, the government has sought consent from candidates for appointment as chiefs of Corporation Bank, Andhra Bank, Indian Overseas Bank, Uco Bank, Oriental Bank of Commerce, Bank of Maharashtra and Vijaya Bank. Except for Vijaya Bank, where the post will be vacant in February, the top posts in seven other banks will be vacated in 2010.
The government has also sought consent from 11 general managers for the position of executive directors in nine banks
January-March 2009, NII of the PSBs rose 37.8%, where as private banks registered a 20% increase in their NII. An analyst from the market said, "Healthy credit offtake in non-food credit helped the PSBs to increase the net interest income significantly during the fourth quarter."Among the PSBs, Oriental Bank of Commerce has seen significant increase in NII to Rs 989 crore against Rs 460 crore. "The bank's profit has come out of core operation," said the bank's chairman TY Prabhu. While interest income of the bank rose 14.4% during January-March 2010, total interest expended dropped 10.2% during the same period.However, the highest NII margin was recorded by SBI, at Rs 6,721 crore, among the PSBs, followed by PNB (Rs 2,498 crore) and Bank of Baroda (Rs 1,745 crore), Uco Bank's (Rs 744 crore), Andhra Bank (Rs 656 crore).The rise in NII of private sector banks was comparatively lower during the same period. Among the 12 private sector banks, four banks-IndusInd Bank, Dhanlaxmi Bank, ING Vysya Bank and YES Bank-showed more than 50% increase in NII during the fourth quarter.HDFC Bank had the highest NII of Rs 2,351 crore during the period, followed by ICICI Bank and Axis Bank (Rs 1,460 crore). However, NII of ICICI Bank fell marginally by 4.9% from Rs 2,139 crore to Rs 2,035 crore.
