Unions Oppose Privatization of Bank Leadership

New Delhi, Oct 10 (PTI) United Forum of Bank Unions (UFBU), an umbrella organisation of nine unions, on Friday registered a strong protest against the government decision to open top positions in PSU banks to candidates from the private sector.

Terming the move as an attack on the public character of national institutions and amounting to a de facto privatisation of the leadership of these institutions.

The changes in guidelines issued without any amendment to the enabling statutes - namely the State Bank of India Act, 1955, the Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 & 1980, and the Life Insurance Corporation Act, 1956 - constitute a serious legal and constitutional transgression, UFBU said in a statement.

UFBU has demanded that all revised ACC Guidelines in this regard should be kept in abeyance with immediate effect pending a comprehensive review.

It also demanded the establishment of a joint stakeholder committee comprising DFS, RBI, FSIB, UFBU, and independent jurists to review leadership-appointment frameworks for all PSBs and SBI.

Unions also pressed for internal succession across PSBs, preserving the principle that leadership should emerge from within the public-sector banking cadre.

Earlier this month, the Appointments Committee of the Cabinet (ACC) revised the guidelines for appointment at the top management level in both public sector banks and insurance companies.

As per the new guidelines, one position of SBI managing director (MD) and LIC MD would be open for private sector candidates. It is to be noted that both organisations have four MDs. ED positions of other public sector banks have been opened for private sector candidates.

By authorising lateral entry of private-sector executives into statutory leadership positions, removing APAR-based evaluation, and introducing HR-agency assessments, these guidelines alter the public character, accountability framework, and legislative intent underlying the nationalisation of banks and the SBI Act, 1955, that too without any Parliamentary amendment or consultation, it said.

The State Bank of India Act, 1955 (Sections 19 & 20), the LIC Act, 1956 (Sections 4, 5 & 22), and the Banking Companies Acts (1970/1980) explicitly vest appointment powers with the Central Government in consultation with the Reserve Bank of India (for banks) or Insurance Regulatory and Development Authority (for insurance), within a framework of public accountability, statutory discipline, and parliamentary oversight, it said.

By introducing lateral entry of private-sector executives, removing APAR-based merit evaluation, and employing private HR agencies for 'behavioural assessment' and selection based on 'interaction', the ACC guidelines have materially altered the appointment framework created by Parliament, it said.

Such alteration cannot be made by executive instruction; it requires legislative amendment and parliamentary debate, it said.

Opening MD & CEO and ED posts to private candidates effectively changes ownership and governance character - a material alteration of the statutory purpose - again requiring Parliamentary sanction, not executive notification, it said.

Under Articles 73 and 77, the USFBU statement said, executive actions of the Union must conform to law made by Parliament.

Without amendment to the enabling statutes, the executive has no competence to alter the structure of appointment or qualification of statutory officebearers of PSBs and SBI, it said.

This unilateral policy shift converts public-sector leadership roles into open-market appointments, thereby dismantling the historic model of career-based succession and institutional continuity in PSBs, it said.

In the past, even the deputation of IAS officers to SBI top management proved a failed experiment, owing to a lack of domain expertise, disconnect with banking ethos, and internal resentment. Re-opening such gates under a new nomenclature amounts to the same policy error, it said.

Moreover, outsider appointment without parliamentary oversight amounts to executive privatisation of statutory institutions, endangering financial sovereignty and public trust, it added.