Mundra flags concern over 'leaderless banks', calls for revamp

Concerned over large number of retirements of senior officials at public sector banks (PSBs) in the near future, Reserve Bank Deputy Governor SS Mundra on Wednesday pressed for the need to focus on HR management and said there cannot be a "leaderless bank".

PTI| Last Updated: Sep 28, 2016, 13:05 PM IST
Mundra flags concern over 'leaderless banks', calls for revamp

Mumbai: Concerned over large number of retirements of senior officials at public sector banks (PSBs) in the near future, Reserve Bank Deputy Governor SS Mundra on Wednesday pressed for the need to focus on HR management and said there cannot be a "leaderless bank".

"We are able to talk about a driver-less car but I think we are far away to talk about a leaderless bank. I think that is not going to happen tomorrow," Mundra said at a banking event here.

His comments come to the fore as SBI chairperson Arundhati Bhattacharya's three-year term ends on Saturday, but the government has not yet given her an extension or spoken about a successor so far.

He pointed that many MDs, CEOs or even CMDs of PSBs are retiring over the next few years.

"In state-run banks if you look at the total 20 CEOs or CMDs, there is one vacant position at every one of them. Eight of them are retiring in 2017, 10 in 2018 and there would be only one who would be retiring beyond the next two years," Mundra said.

He however reserved his comments on SBI for various reasons.

On the second layer of leadership at banks, that is executive directors, Mundra said a stock of EDs are either already retired or are retiring through the rest of 2016.

"Five are retiring in 2016, seven in 2017, 10 in 2018, 12 in 2019 and the rest three will be retiring in 2020," the deputy governor said.

Nearly 73 per cent of the deputy general managers and general managers put together at PSBs are above 55. And another 23 per cent are in the age group of 50-55, he added. This leaves them with no chance of getting promotions before retirement.

"So this is whole profile of leadership, the succession line is missing and as I said before, it can not be a driver-less car. So this is another area which needs a serious attention," Mundra said.

Admitting that there cannot be a clear complete comparison between appointments at PSBs and their private sector peers, given the structure of the former, Mundra said the least that can be done is to ensure that a PSB's CEO is appointed for at least five years if he or she meets the government defined milestones.

"If those milestones are achieved at the end of the three years, then the next two years should be automatic without any questions asked," Mundra concluded.