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Business News/ Industry / Govt flays lobbying for top posts at PSU banks
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Govt flays lobbying for top posts at PSU banks

In a circular issued to banks, financial institutions and insurance firms, the department has warned officials against making unauthorized visits

The finance ministry is in the process of finalizing appointments of bank chiefs in state-run banks and will start the process of appointing executive directors in state-run banks towards the end of this month. Photo: Pradeep Gaur/MintPremium
The finance ministry is in the process of finalizing appointments of bank chiefs in state-run banks and will start the process of appointing executive directors in state-run banks towards the end of this month. Photo: Pradeep Gaur/Mint

New Delhi: The finance ministry is keen to discourage lobbying for top posts in state-owned banks.

Even as it is finalizing appointments for top posts in state-run banks, the department of financial services has moved to restrict the entry of bank officials to its premises.

In a circular issued to banks, financial institutions and insurance companies last week, the department has warned officials against making unauthorized visits.

Since the government owns a majority stake in state-run banks, officials from such banks are regular visitors.

“The department has been witnessing large scale unauthorized and irregular visits by officials and employees of banks, financial institutions and insurance companies in the recent past… It has also been reported that some bank/financial insurance officers have attempted to reach out to DFS officers in the hope of seeking personal favour," the circular said.

Mint has reviewed a copy of the circular.

The finance ministry is in the process of finalizing appointments of bank chiefs in state-run banks and will start the process of appointing executive directors in state-run banks towards the end of this month.

These appointments have come under scrutiny after Syndicate Bank’s chairman and managing director S.K. Jain was arrested in a bribes-for-loans scam and the Central Bureau of Investigation (CBI) has since widened its enquiry to UCO Bank and Bank of Maharashtra.

Subsequently, the finance ministry scrapped the appointment process started by the previous United Progressive Alliance (UPA) government and initiated a fresh appointment process.

The government is currently in the process of appointing chairmen and managing directors at eight state-run banks.

The government is also expected to conduct interviews for posts of executive directors for at least 14 positions.

The circular directed all officials to seek prior appointments and meet officials only above the joint secretary rank as far as possible, and only visit the ministry when they have legitimate work.

In the aftermath of the bribes -for-loans scam, finance minister Arun Jaitley promised to strengthen the governance practices at banks.

The finance ministry has proposed that only qualified people be appointed as independent directors.

It has also moved to separate the post of chairman and managing director and give fixed tenures to bank chiefs.

The finance ministry’s circular “indicates that it wants to stem lobbying and go about the appointment process in a (more) fair and transparent manner than what was followed in the past," said an analyst at a broking firm who did not want to be identified.

The appointment of competent officials to the key posts would go a long way in improving the image of state-owned banks, this person added.

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Published: 19 Dec 2014, 12:27 AM IST
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