The government’s decision to bifurcate the top position at public sector banks will bring in transparency and accountability, say experts.
On Wednesday, the government initiated management reforms in public sector banks by splitting the post of Chairman and Managing Director in four banks and appointing managing directors (MDs)/chief executive officers (CEOs) in Vijaya Bank, Indian Overseas Bank, United Bank of India and Oriental Bank of Commerce.
“It is an extremely healthy move, and will improve governance. In the U.S., more than 50 per cent of enterprises follow this and this practice is followed all over the world,” said Shailesh Haribhakti, Chairman, DH Consultants.
“Combining the positions of Chairman and Managing Director with one person is contradictory to the effective functioning of the organisation as the Chairman is the custodian of governance, while the MD/CEO is the custodian of assets and efficiency of running of the organisation. When the same person holds both positions, it leads to confusion and some time even to sacrifices. These are different roles, and so these positions must be occupied by different individuals,” Mr. Haribhakti added.
The move to separate the posts would bring in more professionalism in their functioning, said D. S. Rawat, national Secretary-General, Associated Chambers of Commerce and Industry of India.
“It looks as though the government wants to bring in outside experts as chairmen in some of the banks, which will be a great value addition to the state-owned banks,” said Mr. Rawat.
“However, it is time the remuneration of CEOs in PSU banks is enhanced somewhere near to their peers in the private sector. It cannot be that while we expect the CEO to give performance under challenging circumstances taking into account the social obligations of these banks, but we do not pay them the commensurate salaries,” he added.
On Wednesday, the government initiated management reforms in public sector banks by splitting the post of Chairman and Managing Director in four banks and appointing managing directors (MDs)/chief executive officers (CEOs) in Vijaya Bank, Indian Overseas Bank, United Bank of India and Oriental Bank of Commerce.
“It is an extremely healthy move, and will improve governance. In the U.S., more than 50 per cent of enterprises follow this and this practice is followed all over the world,” said Shailesh Haribhakti, Chairman, DH Consultants.
“Combining the positions of Chairman and Managing Director with one person is contradictory to the effective functioning of the organisation as the Chairman is the custodian of governance, while the MD/CEO is the custodian of assets and efficiency of running of the organisation. When the same person holds both positions, it leads to confusion and some time even to sacrifices. These are different roles, and so these positions must be occupied by different individuals,” Mr. Haribhakti added.
The move to separate the posts would bring in more professionalism in their functioning, said D. S. Rawat, national Secretary-General, Associated Chambers of Commerce and Industry of India.
“It looks as though the government wants to bring in outside experts as chairmen in some of the banks, which will be a great value addition to the state-owned banks,” said Mr. Rawat.
“However, it is time the remuneration of CEOs in PSU banks is enhanced somewhere near to their peers in the private sector. It cannot be that while we expect the CEO to give performance under challenging circumstances taking into account the social obligations of these banks, but we do not pay them the commensurate salaries,” he added.
Source - The Hindu
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