Selection of CMDs and EDs in Public Sectors Banks Are Nothing More
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At the outset, I would like to admit that idea of writing an
article under this heading is not my original idea. A number of
times such thoughts have crossed my mind, but I could not assimilate all these
to write an article under such explosive heading. As I was
searching for something on banking, I came across a write up of 2005 in Rediff
under the heading "Farce of Bank CMD Selection" (the original articles appears
to have been published in Business Standard). As I read the article,
I felt that nothing has changed in last 7 years. Thus, I thought of
sharing my views with our readers with my own experience and current happenings.
Let us examine some recent experiences which led us to believe that selection to
the posts of CMDs and EDs in PS banks is a farce.
(A) Eligibility Criteria : The
First and foremost is the eligibility criteria for becoming CMDs and EDs of PS
Banks. The question to be asked is, whether we have any fixed criteria of
eligibility over a long period. The answer is big NO.
The eligibility criterion is changed so frequently and arbitrarily that no one
is ever sure, whether next time he or she will be eligible for being called for
interview. The eligibility criteria is changed as per whims of
the political and bureaucratic bosses, who do so to include or exclude certain
candidates. The news item of May 2011 in ET read
'Facing shortage of experienced hand, the government has
relaxed the criteria for selection of Chairman and Managing
Director (CMD) of public sector banks, a decision that would
make several executive directors eligible for elevation as CMD.
Under the new criteria, a bank executive director (ED) with a
minimum experience of 6 months would also be eligible to become
CMDs. Earlier, an ED had to serve a minimum of one
year to become eligible for the bank's top post. The
government has eased the experience clause to 6 months from
earlier requirement of at least 12 months".
Currently (August and September 2012), again the norms of selection
criteria and postings of CMDs is again being tweaked
to suit the current FM. Files are moving from
our Ministry to another department and back to
approve the lateral movement of CMDs.
In respect of eligibility criteria, I would like to quote
from the above article as these words still appears to be very
Q1 . Which of these
statements is true?
(i) If you are an executive director
of a public sector bank, you can qualify to
head a PSB as its chairman-cum-managing
director provided you have put
in at least two years of service as an ED
and have a residual service of two years.
(ii) If you are an ED of a PSB, you
can qualify to head a PSB as its CMD,
provided you have put in at least six months
of service as an ED and have a residual
service of two years.
(iii) If you are an ED of a PSB, you
can qualify to head a PSB as its CMD, even
if you have a residual service of less than
Ans : All of these
statements are true.
Q2. Which of these
statements is true?
(i) If you want to become the CMD of
a big PSB, you must become the chairman of a
small bank first.
(ii) If you want to become the CMD of
a big bank, you don't need to migrate from
one small bank to a big bank. (iii) (iii)
You can directly be made the chairman of a
(iv) You can never become the CMD of
the same bank where you're an ED.
(v) You can indeed become the
chairman of the same bank after serving as
Ans : Once again, all
these statements are true.
In last 7 years some changes may be required to redraft
the questions, but if we will see the eligbility criteria for
last 7 years or so, there will be no doubt that eligibility
criteria has been a BIG FARCE and manipulated every year to suit
the candidates who have created leverage in the political
(B) Farce at Interviews for CMDs and
We all are aware that how the selection of CMDs and EDs
take place. 20 to 30 candidates are called on a single day
/ two days (if number is bigger). The interview
board calls each of them and asks them standard type questions
for 10 to 15 minutes (sometimes it can be even less or slightly
longer). Something on similar lines as it happens for
selection for the posts of Manager / Sr Managers at bank level.
Can a Board assess anybody for the post of CMD or ED in 10 to 15
minutes? I know when my son was to be appointed at a
Middle Level in an American MNC, he had to appear for 7
interviews with total time around 6 hours of interview times.
Here in India even for selection of CMD of biggest banks, 15
minutes is sufficient. This shows the level of our
commitment in selection process. Everything is pre
arranged and interviews are mere FARCE.
(C) What weightage is given to
Real Banking Experience: I would not be off the
mark, if I say NONE. There are examples where
officers who have NEVER worked in a branch have become CMDs of
not one bank but TWO banks. Even while promoting a
hard working and honest officer in Scale III, the same
CMDs and EDs shamelessly ask what is your total experience of
working in a branch. If they have decided to deny him
promotion, he will be told that you do not have sufficient
experience of working in branch. I wonder why nobody asked
such questions to them during their elevation from Scale I to
Scale VII. If this is not FARCE, than what we
will call FARCE. Moreover, there is no higher
weightage given to people who have worked in a bigger banks. A
review of the present trends will indicate that people from
smaller banks have risen to become CMDs and EDs at a much faster
pace than the people working in bigger banks like PNB.
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(D) No weightage to Seniority even
after selection in the panel : Even after selection in a panel,
there is no criteria for giving weightage to seniority. We will see
that from a panel of the selected persons, suddenly a junior most will be given
first as the posting than the senior most post. Even in the latest
list of promotions from GMs to EDs, a number of juniors have already been posted
as EDs almost four months back whereas some very senior GMs (rather Chief
General Managers) from the same bank have been denied the postings till date.
What is the criteria ? Nobody can explain the same. There
appears to be utter chaos and nepotism in the posting from the finally selected
candidates. Sometime good candidates although selected get never
posted and new panel is created. Once a panel is created, what is problem
in adhering to seniority. This kind of arbitrariness brings
corruption and heart burning among honest officers
Latest FARCE : Fate of Lastest
Selection Process : It is a complete FARCE : The interviews for
selection of new CMDs in six Public Sector Banks were conducted on 12th January,
2012 in a great hurry and the reports indicated at that time that list will be
out maximum within 8 to 10 days or so. Now even after a lapse of 8
months, nobody is sure when will be the list declared. Similarly,
interviews for filling up posts of EDs was held towards end of January 2012.
Then suddenly some candidates were posted as EDs whereas others have been left
in the lurch. We have been covering the latest developments in our Hot
Talks as nobody gets any authenticated news but only rumors and overheard talks.
Keeping such postings in limbo only encourages nepotism and corruption as
candidates whose names are floating to be approved have to continuous keep their
political bosses happy so that there name is not dropped from the final list.
A Branch manager is expected to sit late, sometimes even for whole night, to
complete a proposal, but our PM, FM can sit on a file for 8 months for which
interviews have been completed and nothing is pending. Therefore, I
am forced to say it is FARCE, FARCE and only FARCE.
I can write many more instances of this FARCE, but may
be, I have a taken VRS at only AGM level (which is considered as a junior
level when viewed by EDs and CMDs) and thus many higher level officers may find
it difficult to digest my writings. Therefore, I stop here and once
again quote below from the Business Standard article which I feel
still reflects my views in better words than what I would have written (as these
are not my words, I hope senior bankers will not curse me directly!!) :-
Conclusion : "So,
for all practical purposes there is no framework for selection of
the top executives of nationalised banks. As a result,
political parties step in to influence the decisions.
"You really cannot blame the bankers.
This is a complete rule of the jungle
and the bankers often approach a political leader for a favour
as there is no choice. Had there been a uniform formula for
selection, no one would have dared to seek help from the political
bosses," says an HRD professional in the banking industry.
In the private sector, either the CMD is groomed within the
organisation and exposed to various facets of banking before
reaching the top, or headhunters look for the right candidates once
the incumbent CMD calls it a day.
A series of interviews
and group discussions spread over weeks or even months are the
necessary ingredients of the selection process.
And once the CMD takes over, the board continuously evaluates
performance. In stark contrast, the
performance of executives of nationalised banks is under the glare
of the board till the level of EDs, and once an ED becomes a
chairman, people stop looking at his report card".
I am thankful to the author of the original article
Tamal Bandyopadhyay, who made my life easier as
I do not have to search for the right words for the concluding
There has been no change in last 7 years, I do not know how
long it will take to bring changes for the good in banking industry.
I also know that there is little chance that my article will bring any immediate
major change. But we will continue to create awareness and fight for
transparency in our system. I hope at least some readers will continue to
support us in this endeavour.
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