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Selection of CMDs and EDs in Public Sectors Banks  Are Nothing More Than Farce

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Rajesh Goyal 




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 relevant :


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 two years.


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 big bank.
  • (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 its ED.


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 circles.



(B) Farce at Interviews for CMDs and EDs :


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 remarks.







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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