Syndicate Bank scandal fallout: Govt could split CMD post in PSU banks

After thebribery scandalinvolving Syndicate Bank chairman SK Jain, the government has gone into offensive mode with regard to appointment of executives at state-run banks and could even change the hierarchy in the banks’ organisation to reducethe scope of political interference.

Thecentral governmentis reportedly preparing a slew of appointment reforms and forstarters, the posts of chairman and managing director will be separated with the former will be a person of repute from the banking sector, while the MD will be given a fixed tenure of three years, which can be extended by two years, _The Times of India_reported.

In an attempt to bring in accountability to the positions, the government is likely to transfer MDs if banks fail to perform.

Last week,Finance Minister Arun Jaitley had written to RBI governor Raghuram Rajan and cabinet secretary Ajit Seth on the matter.

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The Times of India then reported that Jaitley took action after some of the appointments processed by the previous government lacked transparency and hinted at political considerations having played a part.

_Firstbiz_ had earlier notedthe role of middlemen in the appointments of top-level executives at public sector banks. In many cases, prospective candidates pay up middlemen to negotiate with the power centres to ensure the slot.

The stake involved could be several crores of rupees, depending upon the profile of the position offered and size of the institution.

For those who bag the ‘costly job’, to recover the money through their regular compensation is impossible and the only way to do so is to extend favors to clients and receive kickbacks and they often do that. Some get caught, some do not.

_Firstbiz_ columnist Santosh Nair had spokento a former bank chairman , who indicated that the going rate for top-level jobs at PSU banks could beas high asRs 40 crore.