Govt Opens Senior PSB Roles to Private Sector Talent

Professionals from the private sector can now apply for senior leadership roles in public-sector banks (PSBs), including the esteemed Managing Director (MD) job at the State Bank of India (SBI), marking a first for Indian banking.

The reform marks a substantial shift in the way public financial institutions choose candidates for senior positions including MDs, CEOs, and Whole-Time Directors (WTDs). It is a component of a larger effort to promote openness, competition, and merit-based hiring at the top echelons of the banking industry.

The Appointments Committee of the Cabinet (ACC) has cleared a revised set of broad-based guidelines for the appointment of WTDs (which includes Chairpersons, CEO, MD, and Executive Directors) in PSBs and other insurance companies owned by the state.

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In accordance with the new guidelines, private-sector candidates may apply for the SBI MD if they fulfil prescribed eligibility conditions. An applicant should have a minimum of 21 years experience in their career, of which at least 15 years should be in banking, and must have been on the board at a bank for at least two years, or have been at the highest level below board for at least three years.

The Financial Services Institutions Bureau (FSIB), which is responsible for suggesting individuals for important financial positions, has the authority to engage outside human resources firms to assess applications from the private sector. Notably, the government has moved toward a contemporary, performance-based evaluation framework by eliminating the need for Annual Performance Appraisal Reports (APARs) from the selection process.

The Ministry of Finance's Department of Financial Services (DFS) has formally informed state-run insurance and public-sector banks of these modifications, including the updated appointment processes.