In a major shift from its earlier policy stance, the government and the selection committee responsible for the appointments of public sector bank chiefs, could turn to private sector lenders to rope in the best talent.
So far, only internal candidates already engaged with public sector banks could apply for the top post.
The move comes at a time when banks are witnessing a surge in non-performing assets — loans that do not yield returns — and slowing credit demand. While state-owned banks have been hiring talent from outside for various other roles, the top slot has always been reserved for insiders till now.
However, no final decision has been taken yet on the issue.
“It is important to have the best talent and we may also look outside the public sector umbrella to hire them… it is a critical phase for banks in India and hiring the best is critical,” a senior government official told HT.
The government has already initiated a move to segregate the role of chairmen and managing directors in public sector banks.
State-owned banks would also have more specialists on board as independent directors including financial sector analysts, economists and experts, in a move to improve their standards and increase efficiency.
“We want to give banks more autonomy and the best talent so that they can stand competition... we would hire more specialists with high credentials and excellent track records from outside as independent directors and for other roles,” the official said.
Finance minister Arun Jaitley had said in his budget speech that the government was keen to give banks more autonomy.