Govt mulling measures to bolster governance & HR practices in public sector banks – The Economic Times

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Some of the key proposals include longer tenure for executive directors, hiring of specialists in areas such as NPA management and fast track promotion for high performers.

The government is considering measures to further strengthen corporate governance and human resource practices in nationalised banks through a diversified board structure, strengthening of board-level committees and a robust performance management system for employees.

“The merger process is complete and now its high time to revamp the corporate governance and HR practices on the lines followed by banks such asState Bank of IndiaNSE -0.26 %,” said an executive aware of the developments.

Some of the key proposals include longer tenure for executive directors, hiring of specialists in areas such as NPA management and fast track promotion for high performers.

“The idea is to further professionalise the boards of PSBs and bring experts in risk management, information technology and human resource management,” the above quoted executive said, adding that after merger, these banks are as big as State Bank of India.


The government announced the merger of 10 public sector banks into four big ones in August 2019, bringing down the number of PSBs in the country to 12 from 27.

Oriental Bank of Commerce and United Bank of India were merged into Punjab National Bank; Syndicate Bank was merged with Canara Bank; Allahabad Bank withIndian BankNSE 3.88 %, and Union Bank of India with Andhra Bank and Corporation Bank.Punjab National BankNSE -0.96 % (PNB) is the second-largest public sector bank after the merger.

These discussions may be further taken up with the Banks Board Bureau to formulate a long-term strategy.

“It has been observed that while there is a need for specialists, top-level posts also need to have experience of core functions,” said another executive, adding that there is a need to groom people from the parent bank who can take up higher assignments later.

One of the key mandates of BBB is to help banks to develop a robust leadership succession plan for critical positions and advise the government on evolving suitable training and development programmes for management personnel.

“BBB will also maintain a database on performance of the officers of PSBs. This will have information regarding postings, placements, promotions and vigilance of senior officers,” he added.

Banks through Ease 4.0 may also take up these issues at their board level. Launched in January 2018, Enhanced Access and Service Excellence (Ease) is the common reform agenda for all public sector banks aimed at institutionalising clean and smart banking.

“We have suggested to identify competencies and conduct competency assessment of Scale V and Scale VI officers with significant tenure left in the bank through board-approved tools and methodologies,” said the above quoted executive.

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