Hemmed in by competition in the overseas market, India’s state-owned bank CEOs and executive directors are demanding more autonomy and flexibility on certain service rules, such as foreign travel.
Under the current norms, the CEO of a state-owned bank that has branches overseas can spend 20 days abroad in a year (to visit the branches), and CEOs of banks that don’t have overseas operations, can go for 10 days (to meet foreign investors, correspondent banks, or get a first-hand experience of best practices of other banks). In case CEOs and EDs need to spend more days, they need the nod from the finance ministry .
The finance ministry, which is now looking into the issue, however, could soon relax the overseas travel norms, a senior government official who did not wish to be identified told Hindustan Times.
The government and the Indian Banks Association (IBA) have also held discussions on the issue.
“Such rules are archaic considering the fact that the banking sector and the overall economy are poised for growth, the norms could be revisited,” the official said.
The state-owned banks have significantly expanded their operations and network in the overseas markets.
A senior executive of a public sector bank on condition of anonymity said that a ceiling of 20 days on overseas travel was acting as a major constraint as it was important for top executives to spend more time in meeting foreign investors and to acquire best practices from global peers.
Competition is expected to rise once the Reserve Bank of India (RBI) grants fresh licenses to private sector entities to set up banks abroad. Several foreign banking majors are also eager to foray in the Indian market.