Public sector bank chiefs may get 5-year term

NEW DELHI: Taking a cue from the private sector, the finance ministry is finalizing a new policy that will provide a fixed five-year term for public sector bank chiefs.
The move is aimed at providing continuity in top jobs at the state-run banks, where most chairmen get a one- or two-year term. There are only a handful of bankers who enjoy four-five year tenures and that too is often spread over two banks.Short tenures are seen as a major hurdle for long-term planning and strategy implementation, prompting the government to rework the appointment policy.
Among the private players, ICICI Bank gave Chanda Kochhar a five-year term in 2009, when she was still in her early 40s. At rival HDFC Bank, Aditya Puri has been at the helm since 1994. In contrast, SBI chairman Pratip C Chaudhuri has a tenure of over two years, leaving his predecessor O P Bhatt’s five-year term as the longest ever.
Sources said that the new norms, which need to be approved by finance minister P Chidambaram, could end up changing the succession plan at several banks although it is expected to apply only to new bank chiefs.
The proposal includes reducing the age of selection from a pool that includes executive directors of nationalized banks, deputy MDs of IDBI and MDs of SBI associates. Those who have been EDs for at least two years and have one year for superannuation would be eligible for appointment for five years. Hence, the retirement age may get pushed to 64 years in the initial year, but the finance ministry does not see any problem with it as the government has already raised the age of superannuation in technical departments to this level.