The finance ministry has decided to restructure the top managements of most state-owned banks amid rising competition, sliding asset quality and slowing credit demand.
The government is set to appoint an additional executive director for most PSU banks.
Competition is also expected to hot up as the Reserve Bank of India prepares to allow more foreign and private sector players to enter the fray.
Banks with a total business of over Rs 300,000 crore, which already have two EDs will have one more on their boards from the next financial year, while banks such as Dena Bank and Vijaya Bank with over Rs 100,000 crore business are likely to have two EDs instead of one.
The government wants to focus more on human resource issues and the new EDs would primarily look into the HR issues.
“The move would help in segregating work and the top officials would be able to focus more on their core areas,” a government official, who did not wish to be identified, said.
Recently, global rating agency Moody’s downgraded the outlook for India’s banking industry from “stable” to “negative” saying that the quality of asset could deteriorate in the next 18 months due to rising interest rates.
In October, Moody’s had also downgraded its rating for the State Bank of India.