Finance Ministry agreed to Lateral Hiring of Bank Chairmen

Union Finance Ministry on 22 August 2012 decided to favour precedence rather than merit in case of appointment of the top-level job in state run small banks. The finance ministry approved the lateral movement of bank chairmen as against its earlier stand of selection on the basis of merit.

The appointments for the key post in Bank of India, Bank of Baroda and Canara Bank were earlier to be filled through executive directors and not chairmen of smaller state-run banks, which was a precedent. The selection panel, which also has senior RBI officials, had selected six candidates for filling up the vacancies in 2012. But now, the current chairman of Indian Bank TM Bhasin will move to Bank of India and present UCO Bank chairman Arun Kaul will join Bank of Baroda.

The earlier recommendations were to promote Central Bank of India executive director (ED) Vijayalakshmi R Iyer as the next CMD of Bank of India. S S Mundhra, who is in Union Bank of India, will now join UCO Bank.
But sources close to the development confirmed that the finance ministry’s proposal to remove lateral movement of heads of smaller banks to big ones is now jinxed.

The ministry had earlier sought view of the central bank, RBI, on the lateral movement and on a fixed tenure of at least three years for bank chairman. The move also jeopardise the finance ministry’s plan to implement the recommendations of the Khandelwal Committee, set up to look into human resource issues at state-run banks. The committee had favoured a common pool of general managers in the industry to be created for future executive directors or chairmen.