PSU bank heads need longer tenures, says RBI’s Mundra
MUMBAI: The Reserve Bank of India feels that heads of public sector banks (PSBs) should have a minimum term of five years, as that much time is needed to build strong leadership in the sector, which is currently grappling with bad loans and profitability.
At present most chiefs of state-owned banks are appointed for three years. However, most chiefs are appointed when they are on the verge of retirement.
Speaking at a banking event on Wednesday, SS Mundra, deputy governor of RBI said, “You can’t have complete comparison between public and private sector banks, given their respective structures. But, at least this much can be done, that a public sector bank CEO be appointed for five years minimum.”
Most heads of private sector banks are appointed for a term of 3-5 years and are eligible for reappointment by the board.
Mundra referred to recent statistics on the current tenures of banks chiefs, where about eight chairmen-cum-managing directors are retiring in 2017, 10 will retire in 2018 and only one who would be retiring beyond next two years.
“Nearly 73% of the DGMs (deputy general managers) and GMs (general managers) in PSBs are above 55 years. And, another 23% are in the age group of 50-55 years,” Mundra told an audience of industrialists, bankers and economists. “Unlike in today’s auto industry, where we can talk about driverless cars, we cannot talk about a leaderless bank. This is another area which needs serious attention.”