(b) Top Management :   CMDs and EDs of PS Banks are already in a state of shock after the sacking  of CMD of Syndicate Bank, S K Jain, a few months back.  This was followed by unceremonious exit of Mr K R Kamath of PNB, who was shown the door even before he reached the age of 60.   Eight  top bank posts remained vacant for so many weeks.   Now on the last day of December 2014,   government announced the acceptance of  Nayak committee's recommendation for  splitting the post of chairman and managing director (CMD) in public sector banks, which has even been supported by RBI in recent statement on the plea  that the CMDs of public sector banks enjoy absolute power and often dominate the boards during their tenure, and that this functional separation will help improve the functioning of the top management of banks.   As per the reports the new structure of the top management of the banking sector will be as follows:-   

The post of CMD for PS Banks has been split into two posts, namely -   (i) Chairman  and (ii) MD and CEO.   In this structure, Chairman will be only  a part-time Board member who would preside over the Board meetings and will not be an executive chairman ;     The procedure for selection of part-time chairman would be announced shortly     The new appointments will be for three years or till the date of superannuation, whichever is earlier.   On that date, the following postings for four new  MD & CEOs were also announced:-

·         Mr. R Koteeswaran wss  appointed as MD and CEO of Indian Overseas Bank,

·         Mr. Animesh Chauhan will head Oriental Bank of Commerce (OBC)).

·         Mr. Kishore Kumar Sansi, will be the new MD and CEO of Vijaya Bank

·         Mr. P Srinivas will be MD and CEO for  United Bank of India

Thus, the above CEOs will have curtailed powers as compared to previous CMDs.

For appoint to Syndicate Bank was kept on hold.   For three `A’ Category large banks — BoB, PNB and Canara Bank — the government has decided to go for a fresh selection procedure to widen the search for candidates

With this new structure of the top management, the fate of existing CMDs, EDs etc. is full of uncertainty as to how the things will move in the coming days.  Whether such posts will too be split soon?  Some of them may face criminal cases or unceremonious  exist like Mr Kamath.  Each one of them will be scrambling to save his job and skin from the forthcoming onslaught of bank reforms.  I presume them to be under lot of stress and some of them may be feeling like our bank industry  stressed assets i.e. NPAs.   Some of them must be doing their best to keep the new bosses in the Finance Ministry in good humor.   A new power struggle for top jobs will be seen.   Moreover, banks will find one more power centre in the shape of part time Chairmen, which can worsen the situation for the bank officers and staff.   Now lakhs of rupees and man hour have to be spent on the visits of this new elite class and their family members.  More photo sessions and more dinners.   GMs / DGMs have to learn the new tricks to keep a balance between Chairman and MD & CEO. 

(c ) Indian Banks – Dilemmas of Bank Reforms :

The process of bank reforms has just began with the split of CMD posts.  It is a direct hit on the top management and union leaders are unable to react to the these reforms.   Some reforms are waiting and some of these may be announced as early as in next two days i.e. at the or after the completion of two day Gyan Sangam, two day retreat of top management of banks being held at Pune on 2nd and 3rd January, 2015, as a brainstorming session to facelift the PS Banks.  The session is to be addressed by PM and FM on 3rd January 2015.   The focus will be on agenda for bank reforms and financial inclusion.  Some even expect that announcements for bank mergers may be made.  People are keeping their fingers crossed for such announcements.

With shaky top bank management, I do not expect any stiff resistance by them at Gyan Sangam, against whatever Government desires.   Rather bankers will see the top management is blindly following the dictate of Govt and will blindly commit the new targets given for financial inclusion.    UFBU having earned the wrath of Aam Banker due to their delaying tactics in wage revision, will find it extremely difficult to earn support to counter such bank reforms mooted by Govt.  Thus, here too top management and unions are cross roads and will not be able to give a proper direction.   Things are likely to move as Modi Government will desire.  There may be feeble voices of dissent but nobody is sure as t how things will take shape in next few weeks.  The sufferers will be bank officers and employees who will be given new targets for financial inclusion and recovery of NPAs.  More late sittings and attending office on Sundays / Holidays.

Another area of concern for the PS Banks is the ever increasing NPAs.  For last few years, every CMD has been making fool of the public by saying that things are likely to improve in the next quarter.  However, NPA has shown upward trend in last few years.   According to RBI data, gross non-performing assets (NPAs) in the banking system rose to 4.5 per cent of gross advances in September 2014, against 4.1 per cent in March 2014.  During the same period, total stressed assets in banks (gross NPAs + restructured advances) rose from 10 per cent to 10.7 per cent. With such a dismal performance in the area of asset quality, no CMD or MD & CEO can dare to speak against bank reforms which Govt may propose to check this slide in asset quality.  

Thus, we can easily conclude that as on day one of 2015, every segment of the banking sector is at cross roads and on back foot.   Nobody is ready to take the problems by horn.    The situation has become too complex and some new steps announced by GoI will tell us the future course on which banking industry is going to roll in 2015.

We will continue to keep updated our readers as things fold in next few weeks.

.