Government Opens Senior Public Sector Bank Roles to Private Sector Candidates
In a major policy reform, the government has opened senior leadership positions in public sector banks (PSBs) to professionals from the private sector. According to new guidelines, one of the four Managing Director posts at the State Bank of India and Executive Director roles at other nationalized banks will now be open to external candidates. The move aims to bring in diverse experience but has been opposed by bank unions, who argue it alters the public character of these institutions.
Unpacked:
Public sector banks were nationalized in 1969 and 1980 to promote financial inclusion, support development goals, and ensure credit flow to underserved sectors. The aim was to shift banks from profit-driven models to institutions focused on inclusive growth and socio-economic priorities, especially in rural and semi-urban areas.
Bank unions argue that bringing in private sector professionals undermines the public and social character of these banks, potentially prioritizing profit over public interest, reducing job security, and weakening the traditional developmental role of public sector banks.
Private sector candidates must have at least 21 years of professional experience, including 15 years in banking, and must have served either two years at the board level or three years at a top executive level below the board. Assessments will be done by independent HR agencies, replacing the older appraisal system.
Public sector banks once controlled nearly 90% of banking assets in India, but their share has gradually declined to about 58% by 2024 due to the rise of private banks, foreign participation, fintech, and operational challenges. Recent reforms and mergers have aimed to increase their resilience and efficiency.