In a move that may have far-reaching implications, the RBI has recommended that the top officers of the public sector banks should be sselected from a pool of talent that may include candidates from the private sector. The central bank has also recommended that the government should dissociate itself from the selection process in identifying the heads of these banks. It has also mooted that these executives may be paid salaries that are comparable with those in other industries.
The RBI said State Bank of India and its associate banks could especially benefit from the infusion of outside talent as the current system, which is restricted to internal candidates, inhibits fresh thinking. The recommendations have been made by the RBI in a paper. The RBI had earlier suggested a tenure of five years for the CEOs of state-rune banks and the government has said that it is examining the proposal. Lateral movement in state-run banks should be restricted to the lower ranks and not take place at the board level as top executives end up spending a considerable part of their tenure familiarizing themselves to a new work environment or trying to bring in practices followed at their previous place of employment, feels RBI.