Modi govt scraps UPA's selection of six public sector bank CMDs | business | Hindustan Times
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Modi govt scraps UPA's selection of six public sector bank CMDs

business Updated: Oct 28, 2014 10:01 IST
HT Correspondent
HT Correspondent
Hindustan Times
public sector banks

The government on Monday scrapped the selection of six public sector bank heads recommended by the previous UPA government after a high-level panel found irregularities in the process that was followed.

HT had first reported on August 26 that the government has sent out informal diktats to state-owned companies' managements to replace independent directors whose appointments could be "politically motivated."

The UPA regime had shortlisted chairman and MDs for Bank of Baroda, Canara Bank, Indian Overseas Bank, Oriental Bank of Commerce, United Bank and Vijaya Bank. The selections were sent to the finance ministry for ratification by the Appointments Committee of the Cabinet.

The government on Monday said it has scrapped the entire selection process. These vacancies, along with the one at Syndicate Bank, will now be filled through a fresh selection process that will involve the RBI governor or his nominee.

The CBI arrested former Syndicate Bank CMD SK Jain after he allegedly demanded Rs 50 lakh from a company in exchange for providing extensions on loans worth Rs 100 crore though the company had defaulted on payments. Several loans that were placed with Syndicate Bank are under investigation.

The CBI had highlighted irregularities in the appointments of PSB CMDs, after which finance minister Arun Jaitley had asked the RBI to take a closer look at the selection process.

The ministry had set up a committee comprising expenditure secretary, RBI governor and secretary, school education to examine the selections.

"After receipt of the report of the committee, the government has decided to cancel the current selection process of CMDs/EDs of public sector banks (PSBs)," the statement said. "The government (had) constituted a committee consisting of secretary (expenditure), secretary (school education) and governor, RBI to examine the selection process adopted for the selections to the posts of CMDs/EDs for 2014-15."

"...Eight posts of CMDs and 14 posts of EDs would require to be filled-up de novo," it added. It has decided to "finalise a new process for selection of CMDs/EDs for all future vacancies." The statement did not spell out the process to be followed.

(With agency inputs)