The government has cancelled the current selection process of public sector or PSU banks for the posts of chairman and managing director (CMD) and executive director (ED), the Finance Ministry said on Monday. PSU bank heads were earlier management-appointed.
The government has constituted "a committee consisting of Secretary (Expenditure), Secretary (School Education) and Governor, Reserve Bank of India (RBI) to examine the selection process adopted for the selections to the posts of CMDs/EDs of Public Sector Banks (PSBs) for the year 2014-15", the Finance Ministry said in a note.
The move comes on the back of the Central Bureau of Investigation or CBI finding irregularities in the PSU chief selection process after Syndicate Bank CMD SK Jain's arrest in August over graft charges.
RBI Governor or a nominee of the rank of Deputy Governor of the central bank has to be part of the selection process, according to the new methodology. RBI Governor Raghuram Rajan in September had stressed on the need for the selection process to be more transparent.
As a result of scrapping the earlier selection process, eight posts of CMDs and fourteen posts of EDs would require to be filled up afresh.
"The government would fill-up all these vacancies expeditiously. The government has also decided to finalise a new process for selection of CMDs/EDs for all future vacancies," the note said
My Views are as follows on above news
Why not any of General Manager, Executive Directors and CMD of public sector banks and financial institutes has been suspended till date even though many of them have been found to be involved in Bribe based lending scam exposed by CBI or media or bank staff themselves?
Why properties of corrupt officials of banks who caused loss of crores of rupees not seized till date and how did the get safe retirement during last decade even if they were found involved in bad lending?
Why not RBI officials or Finance Minister have been punished for choosing wrong ED and Corrupt CMD for a bank?
Why GOI did not think it wise to peep into promotion process which took place for ED and CMD during last ten years of UPA rule?
Why GOI did not think it wise to peep into promotion process which took place for ED and CMD during last ten years of UPA rule?
No purpose will be served only by cancelling the selection board if government of India chooses not to punish members of Interview board who violated norms and who for vested self interest decided to chose bad candidate for the top post like ED and CMD of Bank?
CMD of Syndicate bank was caught in bribe-lending, CMD of Indian bank, Corporation Bank, Bank of India and many other public sector banks have also been found to be guilty of committing serious irregularities in the past and several others have been allowed to retire from bank safely even if they were corrupt, some of them have been given job in other Financial Institute even after retirement with many records of corruption in the past.
A few years ago , CBI charged several high rank officers of bank and LIC housing Finance Company of lending huge money to real estate builders after taking bribe. Several banks have been charged of wrong lending in case of 2G spectrum related case .Even Supreme Court has passed adverse remarks against bankers.
If RBI and GOI could have taken lesson from above episodes and took corrective steps in real sense and true spirit , they could have stopped assets of banks moving from good to bad and bad to worse.
A few years ago , CBI charged several high rank officers of bank and LIC housing Finance Company of lending huge money to real estate builders after taking bribe. Several banks have been charged of wrong lending in case of 2G spectrum related case .Even Supreme Court has passed adverse remarks against bankers.
If RBI and GOI could have taken lesson from above episodes and took corrective steps in real sense and true spirit , they could have stopped assets of banks moving from good to bad and bad to worse.
Unfortunately they have done nothing in the past in real sense. They only played drama and put carpet on all cases of corruption related to top officials and ministers.
In such position how one can imagine that interview processes taking place in these banks for promoting an officer from one scale to higher scale may be true , justified and without involvement of bribery flattery and favouratism.
When ED and CMD of a bank are corrupt , it is but natural all processes taking place in respect of recruitment, promotion, purchase of goods and services and sanctioning or
loans are doubtful . Usually flattery and bribery are two keys for an officer to get success in such promotion processes . It is open secret.
When top bankers are corrupt there is no doubt that a culture of corruption is wide spread in that bank in particular and in PSU banks in general. Still RBI, Ministry of Finance and government of India as a whole is silent on taking punitive action. It is only because Dirty Ganga emanates and originates from Ministry and RBI only.
Had it a been a clerk or a simple officer, top management could have suspended him immediately.
GOI and IBA deny wage hike to bank staff saying that banks have no paying capacity knowing very well that junior staff are not at all responsible for any big loss caused to bank by poor assets. Executives of some banks have also pleaded separate pay revision for executives .
GOI and IBA deny wage hike to bank staff saying that banks have no paying capacity knowing very well that junior staff are not at all responsible for any big loss caused to bank by poor assets. Executives of some banks have also pleaded separate pay revision for executives .
Is Finance Minister not responsible, accountable and punishable for selection of wrong and corrupt ED and CMD for a bank?
Why General Manager rank officers alleged to be involved in corruption and charged by CBI are allowed to continue in their post or even promoted is a million dollar question?
It speaks how much deep rooted is the cancer of corruption in the banking system in particular and in government departments in general.
Banks ask for equivalent or even more amount of collateral security and guarantors even for financing a few lac or a few crores of rupees to common business men. But they think it safe to finance hundreds and thousands of crores of rupees to big corporate houses, telecom companies, power makers and distributors, real estate builders.
Why?
Government of India has decided to change the constitution of selection process but has not strike at the root of corruption?
Government has not stopped the dirty selection process of promotion going on for a decade and more for internal promotion in these banks.
It is the culture of bad promotion and ill-motivated posting which has resulted in current sickness of PS banks.
It is the humiliation given to senior officers by promoting juniors based on flattery and bribery which has caused rise in stressed assets to a great extent.
Still GOI is silent on this issue though several complains have been sent in last few years to MOF and RBI and several cases have been lodged in various courts of the country. Clever chiefs of banks spend crores of rupees in putting hindrances and delaying judgement from court of law and they leave no stone unturned to ensure withdrawal of cases by building pressure on petitioners and ensure abortion of Justice before it comes from Temple of Justice.
It will be foolish to imagine of reforming PS banks by carrying out little surgery . Need of the hour is carry on thorough scrutiny of all processes and punish the guilty in all cases so that clear message is conveyed to all government officials, bankers and other concerned officials that corruption at any level will not be tolerated.
It must be kept in mind that stray cases of corruption at high level which came to light in last few years are just indicative . Actually there are hundreds and thousands of such cases. By mistake one or two cases of corruption are exposed when the corrupt officer commit some mistake . Otherwise game of corruption is normally played very cleverly,safely and cautiously. Obviously corruption at top level is all pervasive and cancer of corruption has engulfed entire banking system.
It must be kept in mind that stray cases of corruption at high level which came to light in last few years are just indicative . Actually there are hundreds and thousands of such cases. By mistake one or two cases of corruption are exposed when the corrupt officer commit some mistake . Otherwise game of corruption is normally played very cleverly,safely and cautiously. Obviously corruption at top level is all pervasive and cancer of corruption has engulfed entire banking system.
Govt to change how bank chiefs are chosen
Existing vacancies to be filled through new process; bankers and analysts say RBI may have a stronger role-----LIVEMINT http://www.livemint.com/Politics/vYpsVipL2RAeifDP783GiK/Govt-to-change-how-bank-chiefs-are-chosen.html
In an attempt to repair some of the damage done to the reputation of public sector banks after the loan-for-bribe scandal at Syndicate Bank, the government has decided to review and strengthen the process of choosing top executives at state-owned lenders, scrapping the current selection process.
The government’s decision appears to be an indictment of the flawed process followed in the appointment of S.K. Jain as chairman and managing director (CMD) of Syndicate Bank in February 2013—a point made by the Central Bureau of Investigation (CBI) in August this year.
On 13 August, Mint reported that CBI has written to the finance ministry that the procedure adopted for the appointment of Jain had not been transparent. Jain was arrested by CBI on 2 August for allegedly taking a bribe of Rs.50 lakh to sanction a loan in violation of banking practices.
The government’s decision to review and amend the process of appointing CMDs and executive directors (EDs) of public sector banks was based on the report of a committee consisting of secretary (expenditure), secretary (school education) and governor of the Reserve Bank of India (RBI).
The panel was formed to examine the selection process adopted for choosing CMDs and EDs of public sector banks for the year 2014-15.
“After receipt of the report of the Committee, the Government has decided to cancel the current selection process of CMDs/EDs of Public Sector Banks(PSBs). As a result, eight posts of CMDs and fourteen posts of EDs would require to be filled up de novo,” the government said in a statement on Monday night. De novo is a Latin expression that means anew.
Typically, a four-member panel comprising the financial services secretary, an RBI representative (typically a deputy governor) and two external members are on a panel that interviews bank EDs for the post of CMD.
EDs are called for interviews based on seniority, whether they have completed two years of service and whether they have two years of service left. Recommendations are then sent to an appointments committee.
Six state-owned banks are currently operating without CMDs—Syndicate Bank, Oriental Bank of Commerce, Canara Bank, United Bank of India, Indian Overseas Bank and Bank of Baroda. CMDs of Punjab National Bank and Vijaya Bank are set to retire before the end of the current calendar year. Four banks currently have positions open for EDs and many more are expected to retire this fiscal year.
While new appointments were yet to be announced, the process was nearly complete and candidates had been identified, said a serving senior banker familiar with the process, requesting anonymity.
“The Government has decided that a fresh process for selection would have to be implemented for filling up these existing vacancies wherein the Governor, RBI or his nominee of the rank of Deputy Governor should be a part of the selection process,” said the government statement.
Pratip Chaudhuri, former chairman of State Bank of India, the country’s largest lender, said the move to review and amend the selection process was the right thing to do.
“The way some of the previous selections were done was disgraceful and so the government was in a bind. If they endorsed the previous selections, it would have meant endorsing wrongdoing,” he said.
The government also said that it had decided to “finalise a new process for selection of CMDs/EDs for all future vacancies”.
It did not specific what the new process of appointment would be, but bankers and analysts said that RBI may have a stronger say in the process.
A recently retired PSU bank chairman said the process followed so far had been heavily tilted towards the opinion of the secretary of financial services.
“The rest of the members never had any opinion but used to give their nods to whatever the financial services secretary decided,” said the former chairman, who requested anonymity.
A banking analyst also said that government’s nominee had the final say in deciding the appointments. This may get curtailed now with RBI playing a larger role in the process, said the analyst, requesting anonymity as he is not authorized to speak to the media.
RBI governor Raghuram Rajan has been calling for a change in the appointments process and measures to strengthen governance at state-owned banks that control 70% of banking industry assets.
“We have to change the appointment process and expand the talent pool for management and boards of public sector banks, it has to be much more transparent and driven by people with strong capabilities. We have to strengthen board oversight and powers, boards have to be empowered and made more accountable,” Rajan said at a banking industry conference on 15 September.
The need for change in the management structure at state-owned banks was also flagged by an RBI committee appointed to review the governance of boards of banks in India. The recommendations made by the committee, headed by veteran banker P.J. Nayak, included the need for longer tenures to public sector bank chiefs.
The government is yet to take a final view on the tenures although finance minister Arun Jaitley said on 21 August that fixed tenures were being considered.
“What is really needed is fixed tenures for PSU bank chiefs. Currently, CMDs are appointed for 18-24 months. Before they can make any material difference to the functioning of the bank, they retire,” said Vaibhav Agarwal, an analyst at Angel Broking Ltd.
Weak governance practices at state-owned banks have been partly blamed for a surge in bad loans in the banking sector. At 40 listed banks, gross non-performing assets rose 21.03% to Rs.2.52 trillion at the end of June, from Rs.2.08 trillion a year earlier.
NEW DELHI: The finance ministry has decided to take a relook at recent appointments of top-level public sector bank executives as well as a clutch of proposals to designate chairmen just before the UPA demitted office, in what is seen as a direct fallout of the recent arrest of the Syndicate Bank chief by CBI on alleged corruption charges.
Senior finance ministry officials told TOI that a review has become necessary in view of the irregularities that have come to light.
Finance minister Arun Jaitley has written to the Reserve Bank of India governor Raghuram Rajan, who heads the appointment board that selects state-run bank chiefs, as well as cabinet secretary Ajit Seth, who processes all papers for the appointments committee of cabinet, sources said. Some of the appointments processed during UPA's closing days lacked transparency and there are indications that some political considerations may have played a part, they added.
Also Read Magic Of Interview
In a letter to the finance ministry, CBI chief Ranjit Sinha has pointed to some irregularities that have been noticed by the investigative agency during the Syndicate Bank probe. Sources said CBI has suggested a "legal scrutiny" as it has found clues suggesting that ACRs and interviews "were managed" and some middlemen also played a role.
Sinha said Jain was appointed despite having "poor" ACRs. "We have told the government that appointments deserve to go under legal scrutiny. The government has to take a call. There are reports of irregularities in several appointments. We have informed the government about it," the CBI chief said.
For the past few years, appointment of several bank chiefs, executive directors as well as independent directors have been viewed with a degree of suspicion and have often resulted in controversy. The candidates are selected on the basis of an appraisal of the confidential reports (ACRs), which carry 70 marks, and candidates appearing for interviews for executive directors and CMDs can get another 30 marks. Apart from the RBI governor, financial services secretary, an RBI deputy governor and external experts are part of the appointments board.
Similarly, there is no clarity on what goes into deciding the allotment of banks.
Also Read ..Can Pay Hike Solve Moral Issues
There have been instances of some of the candidates barely opening their account in the interviews but still being recommended for appointment based on their ACRs. In 2012, while appointing a second-rung executive, the department of financial services was accused of changing the grades from "very good" to "outstanding", making the executive eligible for the job. Once the gap was pointed out, the appointments committee of cabinet had put the appointment on hold, but later cleared it.
Only one apple Out of Basket of Rotten apples picked up for test
On several occasions, the department of financial services has changes the criteria for appointment. For instance, to become a public sector bank CMD, the candidate should have been an executive director for at least two years and should have at least two years to go for retirement. Often these stipulations have been tweaked.
For instance, this January, as reported by TOI, the government allowed general managers of public sector banks who had less than the stipulated three years to go for superannuation to appear for an interview. This allowed five candidates to appear for the interview at a notice of just a few hours. The exercise to com,plete the selection 13 EDs came weeks before election were announced and on the Anand Sinha was to demit office as RBI deputy governor.
But what really attracted attention in the corridors of ministries was the UPA government's decision to interview candidates for bank chiefs late last year even when the first vacancy was not arising till this August. Another talking point was the cut-off date of August 6 for fixing the eligibility, which usually is the first or the last day of the month. The unusual date and the relaxation in the two-year retirement norm expanded the field to 19 candidates, compared to eight who would have been eligible if the rules were not tweaked.
Click here to Read Mastermind Pawan bansal
Around the same time, the appointments board had called only one candidate for an interview for the job of a managing director in State Bank of India, the country's largest bank.
Link times of India
http://danendrajain.blogspot.in/2014/08/quality-check-of-cmd-of-bank.html
Govt to review senior public sector bank appointments-Times of India-14th August 2014
NEW DELHI: The finance ministry has decided to take a relook at recent appointments of top-level public sector bank executives as well as a clutch of proposals to designate chairmen just before the UPA demitted office, in what is seen as a direct fallout of the recent arrest of the Syndicate Bank chief by CBI on alleged corruption charges.
Senior finance ministry officials told TOI that a review has become necessary in view of the irregularities that have come to light.
Finance minister Arun Jaitley has written to the Reserve Bank of India governor Raghuram Rajan, who heads the appointment board that selects state-run bank chiefs, as well as cabinet secretary Ajit Seth, who processes all papers for the appointments committee of cabinet, sources said. Some of the appointments processed during UPA's closing days lacked transparency and there are indications that some political considerations may have played a part, they added.
Also Read Magic Of Interview
In a letter to the finance ministry, CBI chief Ranjit Sinha has pointed to some irregularities that have been noticed by the investigative agency during the Syndicate Bank probe. Sources said CBI has suggested a "legal scrutiny" as it has found clues suggesting that ACRs and interviews "were managed" and some middlemen also played a role.
Sinha said Jain was appointed despite having "poor" ACRs. "We have told the government that appointments deserve to go under legal scrutiny. The government has to take a call. There are reports of irregularities in several appointments. We have informed the government about it," the CBI chief said.
For the past few years, appointment of several bank chiefs, executive directors as well as independent directors have been viewed with a degree of suspicion and have often resulted in controversy. The candidates are selected on the basis of an appraisal of the confidential reports (ACRs), which carry 70 marks, and candidates appearing for interviews for executive directors and CMDs can get another 30 marks. Apart from the RBI governor, financial services secretary, an RBI deputy governor and external experts are part of the appointments board.
Similarly, there is no clarity on what goes into deciding the allotment of banks.
Also Read ..Can Pay Hike Solve Moral Issues
There have been instances of some of the candidates barely opening their account in the interviews but still being recommended for appointment based on their ACRs. In 2012, while appointing a second-rung executive, the department of financial services was accused of changing the grades from "very good" to "outstanding", making the executive eligible for the job. Once the gap was pointed out, the appointments committee of cabinet had put the appointment on hold, but later cleared it.
Only one apple Out of Basket of Rotten apples picked up for test
On several occasions, the department of financial services has changes the criteria for appointment. For instance, to become a public sector bank CMD, the candidate should have been an executive director for at least two years and should have at least two years to go for retirement. Often these stipulations have been tweaked.
For instance, this January, as reported by TOI, the government allowed general managers of public sector banks who had less than the stipulated three years to go for superannuation to appear for an interview. This allowed five candidates to appear for the interview at a notice of just a few hours. The exercise to com,plete the selection 13 EDs came weeks before election were announced and on the Anand Sinha was to demit office as RBI deputy governor.
But what really attracted attention in the corridors of ministries was the UPA government's decision to interview candidates for bank chiefs late last year even when the first vacancy was not arising till this August. Another talking point was the cut-off date of August 6 for fixing the eligibility, which usually is the first or the last day of the month. The unusual date and the relaxation in the two-year retirement norm expanded the field to 19 candidates, compared to eight who would have been eligible if the rules were not tweaked.
Click here to Read Mastermind Pawan bansal
Around the same time, the appointments board had called only one candidate for an interview for the job of a managing director in State Bank of India, the country's largest bank.
Link times of India
http://danendrajain.blogspot.in/2014/08/quality-check-of-cmd-of-bank.html
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