The Reserve Bank of India (RBI) on 17 September 2014 proposed to segregate the post of Chairman and Managing Director (CMD) of Public Sector Undertaking (PSU) banks. It also proposed a separate committee for appointment of directors on the board of PSU banks.
These proposals are a part of corporate governance reforms in PSU banks and are based on the recommendations of various committees including the PJ Nayak Committee recommendations.
The proposal of RBI may delay the appointments of Chairman in at least ten PSU banks or may bring changes in the top management of the PSU banks. Already top position of 4 PSU banks is lying vacant which are likely to be filled once government finalises the new norms for appointment of bank chairman.
At present, the post of CMD in PSU banks is vested with one person only. As a result CMDs of PSU banks enjoy absolute power and often dominate the board during their tenure.
The only exception among the PSU banks is State Bank of India where the top position is commanded by the chairman and there are four managing directors with clearly defined executive roles.
When: 17 September 2014