Friday, October 5, 2012

Selection Of ED And CMD of Public Sector Bank

Frivolous complaints bog down selection of public sector banks chairmen

collected from Economic times

NEW DELHI: The task of appointing chairmen of state-run banks is proving to be a challenge for the government, with its vigilance machinery getting bogged down in a myriad of corruption charges against selected candidates. 

Since taking office in July, P Chidambaram has cleared the selection of chairmen for six state-run banks, including lateral movement of two bank chiefs. However, two banks-Bank of India and Canara Bank-have been functioning without a chief since Monday. 

Vigilance officials say their task is daunting, as complaints of irregularities start pouring in once a candidate has been selected. "There are all kinds of complaints. Some as frivolous as that the candidate has distributed gold coins in the ministry," a finance ministry official said, adding that in some cases the complainants and addresses were fictional or the objections were filed on forged letterheads. 

The government fears this trend may delay the appointment of chairmen in lending institutions, including Bank of Baroda where the existing chief is due to retire next month. Due to lateral movement of bank chiefs, the post of chairman in UCO Bank and Indian Bank will also need to be filled up. 

A chairman of a state-run bank concurred with the vigilance officials, saying complaints start flowing in once a candidate is known to be a front-runner. "There was a complaint that I had suppressed a fraud at a foreign branch. While the fact is that I was never posted in that city." The ministry official quoted earlier pointed to a similar problem in the case of LIC. DK Mehrotra, the chairman of the state-run life insurer, was appointed almost a year after the government decided not to extend the tenure of TS Vijayan. 

Earlier, following intense lobbying by chairmen of smaller state-run banks, Chidambaram had decided in favour of precedence for appointment to the top-level job. The key posts in Bank of India, Bank of Baroda and Canara Bank were earlier to be filled through executive directors, and not chairmen of smaller state-run banks, which was a precedent. 

The government, however, blames the Central Vigilance Commission (CVC) for the delay in clearances.

Are Complaints Against EDs Approved for CMD Posts Frivolous or Genuine ?

Collected from Website namely                                   
Rajesh Goyal  
Today (05/10/2012) an article has appeared in ET under the heading  "Frivolous complaints bog down selection of public sector banks chairmen".   The whole stress in the article has been that the delay in selection of CMDs for PS Banks is merely on account of frivolous complaints against poor CMD aspirants.   The article concludes  "the government, however, blames the Central Vigilance Commission (CVC) for the delay in clearances".     Can I know, when was the final decision for  taken?   After this decision, for how long the files are pending with CVC?  Is the delay due to CVC clearance or the hectic lobbying of manipulators in MoF for plum posts ?  There is a need to ponder on these questions to reach the bottom of the issue.   National media needs to be more responsible in side tracking the main issue of corruption. 

At we have been constantly trying to give updates based on internal news and leaks (which are sometimes also planted).   All such information we share through our column Hot Talks, which is based on such leaked information that trickles from various sources.    Such information are not always final as number of lobbying groups constantly exert pressures to ensure that they are the real beneficiaries of the final decisions.    When interviews for creating the panel for CMDs were held in the second week of January 2012, it was expected that the list will be out within a week's time.  Hectic lobbying followed and matter could not take final shape even after delay of 8 months - in between even FM has changed.    

It was only at the beginning of this month that was the first to take up the issue of Headless Banks.   In our Hot Talks we have mentioned about the dubious credentials of some of the CMD aspirants.    I know this website is too small to swing the pendulum on right side, but it appears it has certainly made some ripples in the corridors of power by exposing the nexus between politicians and top bankers.   Now articles giving frivolous causes for the delay have started appearing in financial newspapers.   This is mainly to shift the focus from corruption to blaming the CVC for keeping the banks Headless.

It appears the lobby of those dubious credential aspirants has upped their ante and by planting such news items, they  are trying to put pressure on vigilance institutions to clear their names in a hurried manner so as to fill up vacancies.  

Now question arises whether complaints against EDs approved for CMDs posts are always frivolous or always true.   Almost everybody will agree that both statements are incorrect.   There will be certainly some complaints which are frivolous and can be planted by other group.   However, each one of us knows that corruption in India at present has touched its Zenith.   Banking industry is also no exception.  I think the longest list of officers who are charged by CVC every month with corruption is from banks.    Banking fraternity now frequently and openly discusses the 'on going rate' for promotions to the posts of EDs and CMDs.    Can there be smoke without fire?    The amounts mentioned in such talks are mind boggling and at least I am shocked to hear such figures.   It is true that such compensation may not be necessary in all cases, but even if it is in some cases, the question is from where does such huge amounts are collected.   The only way is corruption.  

Therefore, to say that such complaints are frivolous and blame CVC for delays,  is only to skirt the issue of corruption in top circles of the banking industry.    Such news are frequently planted by the most corrupt people as they want to create an environment where CVC is put under pressure to clear their names in a hurried fashion.   If an independent survey is conducted and general perception of the officers at all levels working in such banks is sought, a majority of the CMD aspirants will be found to be in the negative list on account of perception about corruption during their tenure.    Certainly some aspirants will get kudos for clean image.  

Thus, there is a need for revamping the whole system of selection to the posts of EDs and CMDs.   If the practice of payments to political bosses for promotion to the posts of EDs and CMDs continue, then nobody can stop the corruption to collect the funds for making such payments.   When a person will indulge in corrupt practices, there will be certainly complaints by other groups.   The complaints are the only check and balancing system as the people who have paid and received money will never complaint as both of them are beneficiaries of this system.    Therefore, complaints needs to be taken seriously after filtering frivolous complaints.

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

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 ScaleIII, 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. 

     (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.

Will New IBA Chairman Be Able to Check the Group of Cunning & Manipulator Officials at IBA

The way various issues relating to HR have been handled by IBA in recent times, it has become very clear that a group of officials of IBA are not only big manipulators but also extremely cunning.   Therefore, there is a need for all the bankers and union leaders to the cautious and there will be need for hard bargaining on the text  of the Xth BPS.     
IBA can delay the negotiations by months or even years together on the pretexts like  

"IBA does not have the mandate of the member banks"   or  

by not giving time to UFBU leaders even for a meeting till a strike is slapped on the face of IBA.    All this has happened in very recent past - only a few weeks back.   The credibility of the IBA in the eyes of general banker is at the lowest in recent times.

A new Chairman has taken over the guards at IBA on 1st October, 2012.    People usually pin hopes for betterment as and when there is a change at the top.  In this case also, bankers have great hopes.     However,  the feedback which our website receives through emails and otherwise,  is not highly encouraging as it appears that in recent months the staff, specially officers staff, have been given raw deals in the matters of not only postings but also charge sheets in the bank.    There appears to be lot of discontentment among the officers in the bank.    We would like to  quote some words from one of the emails received at ours through an  officer who had a long association with the said Bank.   The email, inter-alia reads:-

"Ever since the CVO joined,  disciplinary action against employees in general and, officers in particular, have assumed alarming rate and proportions.  Alarming Rate -- I mean the number of cases e.g.  as of now, the  number of charge sheets issued and pending at different states against  S-IV & above officers is 250 (yes, two hundred fifty) and many staff side cases are pending which   MAY OR MAY NOT culminate in initiation of disciplinary proceedings.   Alarming proportions -- I mean harshness of penalty imposed -- say where minor Penalty would have met ends of justice,imposition of major penalty; or, where reduction by one or two stages in time scale would have met ends of justice,imposition reduction of pay by six or eight stages; or, where demotion to the next lower grade would have met ends of justice, imposition of penalty of demotion  of a Scale III officer to Scale I WITH ADDITIONAL RIDER THAT   FIXATION OF PAY IN THE LOWER SCALE I WILL BE AT THE INITIAL BASIC PAY (ie. JMGS I) which is against the guidelines of IBA .    

The above situation is due to the fact that the CVO either had no exposure to disciplinary ACTION /  vigilance matters OR he is whimsical.  Secondly, the CVO is supposed to work under the CMD of the Bank. CMD is not interested to look into this serious issue as he is also a rankoutsider and is not interested in the career development of native officers".


The feedback received from other sources also confirms the above.   We also understand that this problem has even started in even the biggest bank of India,  as recently some unions have issued circular in this regard.    However, we leave it to the readers to recheck and get their own confirmations as to whether above facts are true from their close friends and form their opinion as  we do not wish to influence your opinion.   We have flagged this issue merely to caution the top brass of these banks about the present perception that is being built among the officers class.   With our experience, we know there are hardly any officers who can share such frank opinion with their bosses during their service or even after retirement.  If this perception is correct, then there is a need for immediate corrective steps.  Failure to take appropriate steps immediately can result in large scale unrest and will directly affect the business of such banks.

The general perception about him was  undoubtedly  that of a simple and well behaved CMD (a rare trait these days).  but there is also growing feeling that he frequently  fails miserably to notice the manipulators down the line.    Even if he notices these, the damage has already been done by that time by such people.   These manipulators are able to easily convince him against even good people and then action is initiated against those bankers who are hard working but do not indulge in flattery and do not join the groups of such manipulators.  This has undoubtedly affected the moral of officers.    This should be a wake up call for the top brass across the industry in general, and specially among the banks we are talking about.  

With above background and perceptions, there is  every danger that things will not change at IBA level easily.    The attitude of officials of IBA till date has been exceedingly manipulative and cunning and thus this simple natured  new Chairman may here too fail to notice this negative attitudeof IBA and may be swayed by twisted facts .   

The negotiations for Xth BPS are just round the corner and the new Chairman can play a great role for the benefit of the bankers.   Union leaders need to understand the attitude of IBA and make it clear that this time they mean business and not lolly-pops.   If they wish that bankers should get an honourable settlement, it has to be ensured that it is clinched before the next General Elections (These can be held any time in 2013).  Any delay beyond the elections will not bring an honourable settlement as this government is already facing the fiscal crunch and will be soon askingthe banks to shell more in the shape of dividends, rather than looking for welfare of the employees.  

However, we needs to be optimistic and hope the new IBA Chairman  will understand better the problems faced by serving as well as retired bankers at the industry level and not merely at bank level.  This is a bigger challenge than handling the issues at bank level.

There is lot of discontentment among the retired bankers, specially among the leftover bankers who have yet to get 2nd pension option as IBA is not ready to concede inspite of GoI guidelines clarifying the issue in July 2012.   It appears now IBA officials are sitting on false ego issue.   New IBA Chairman needs to address the issue on priority basis as the reports indicate that DFS has again asked IBA to take action as per the letter dated 25th July, 2012.    We quote below message that has been attached to circular No 10 of AINBOF issued by Mr Harvinder Singh

FLASH: Department of Financial Service has reiterated its stand on pension to left outs.  In a communication to IBA D.F.S. has asked IBA to take action as per the letter dated 25th July, 2012 under intimation to D.F.S. We hope that IBA will now advise member banks to extend pension facility without any distinction between retirees and those retired on superannuation.

We, at hope that the message of this Article will reach the new IBA Chairman and he will  take appropriate steps to show the door to manipulators and cunning officials of IBA who by their recent acts have hugely dented the reputation of IBA.   If he fails in this duty, his reputation is certainly going to take a bigger dipper within his bank but also among the bankers across the industry.

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