At least five banks are headless, the FM has little time to spare for the banking industry, but the finance ministry is only focussed on the PM’s pet project JanDhan Yojana

The entire banking industry, led by the finance secretary, is so focussed on enrolling people into the JanDhan Yojana that there is no time for appointments to several top nationalised banks, say agitated senior bankers.  While as many as four nationalised banks remain headless and two more will join their numbers, all we have is talk of more accountability and better appraisal from the Reserve Bank of India.

At a seminar earlier this week, RBI Governor Raghuram Rajan said that there will be stricter evaluation of the role of senior bankers before appointing them to the post of chairman and managing (CMD) after Syndicate Bank chairman S K Jain was arrested for corruption. 

A committee headed by the RBI governor, which includes finance ministry bureaucrats, has been set up to select candidates. But senior bankers complain that that there is no hurry at any level to act even though non-performing assets (NPAs) are sky-high and there is a need for dynamic leadership and tough action at each of the many government banks.

Now consider this.  If the arrest of the Syndicate Bank chairman was a trigger for better selection, why is the post of CMD at United Bank of India (UBI) lying vacant, even after Mrs Archana Bhargava's extremely controversial exit in February, which is seven months ago.  That she was allowed to leave without any action against her only hints at dubious appointment considerations.  Bank of Baroda (BOB) is headless after Mr S S Mundra moved to the RBI. Syndicate Bank remains headless at a time when it needs a clean and dynamic chairman. Indian Overseas Bank has no chairman either.

At the end of September, R K Dubey of Canara Bank and S L Bansal of Oriental Bank of Commerce will also complete their terms while the Punjab National Bank (PNB) chairman completes his term on 31^st October and the Vijaya Bank chairman’s post falls vacant a little later.

While the top posts are vacant, things are no better at the Executive Director (EDs) level.

At least four or five positions are already vacant and every one of the current crop of EDs across all 20 nationalised banks are full engaged in doing only one thing – lobbying for the post of CMD by meeting every politician or politically-connected person who they think will carry clout with this government. And those a level below are lobbying hectically to become EDs or to get transfers to better banks. It is such lobbying that ends in quid-pro-quo deals, later leading to bad loans.

A senior banker says that the JanDhan Yojana is seen as the fastest way to attract the attention of the Finance Secretary and hopefully the Prime Minister (PM) and Finance Minister (FM). So the entire industry is focussed on furious enrolments rather than sensible deployment of funds or effective recovery of bad loans.

It is well known that industry houses have always lobbied for appointments to banks and regulatory bodies in exchange for big favours in the form of fresh loans or write offs. This has been going on for at least three decades. Nothing much seems to have changed. 

A disgusted senior banker says, “this government has no time for appointments or banking reforms or for implementing the P J Nayak committee report on making the appointment process more transparent. The only focus of government JanDhan”. All bankers have been told that they will not be permitted to go on foreign tours until JanDhan targets are met. 

Even proposals to raise capital are in a suspended animation. Finance Minister Arun Jaitley is already overburdened with three major ministries (finance, defence and corporate affairs) and has also been out of action when he underwent a bariatric surgery.

Meanwhile, the RBI officials are more concerned with the internal re-organisation and lateral appointments (hugely resented by all senior central bankers at the RBI) to worry about vacancies at nationalised banks.

Bankers also say that despite Mr Narendra Modi’s promise of being a chowkidar of public funds, it is business as usual when it comes to shady practices. Interestingly, this paralysis in RBI’s and MoF’s decision-making does not seem to affect private banks. The government has acted swiftly to allow private bank CEOs to continue in office until the age of 70, almost as a birthday gift to for two powerful CEOs who are soon to hit the previous limit of 65.

So what will it take for the new government to give focussed attention to the finance ministry? Another big scandal?