Despite public sector banks facing a manpower crunch, the finance ministry has asked them not to recruit officers through campus placements.

“Recruitment of officers in public sector banks against permanent direct recruitment vacancies by resorting to campus recruitment/interview method may not be in accordance with the law...,” the department of financial services has said in a missive all public sector lenders, quoting the advice of the ministry of law and justice. The move follows a decision by the Bombay High Court, which was upheld by the Supreme Court, in a case against the Central Bank of India.

This will mean that public sector banks can hire officers only through examinations such as those conducted by the Institute of Banking Personnel Selection (IBPS).

Over the last few years, many public sector lenders had taken a cue from private banks and had begun hiring some students from management schools, especially for divisions such as investment banking.

Students with specialisation in marketing and finance were preferred by many lenders and they in turn chose these banks for job security, even if the pay packages were not as high as those offered by private sector banks and private sector companies.

But the finance ministry directive has stressed, “Since the decision of the Bombay High Court has now been confirmed in the Supreme Court, the public sector banks are requested that it may be brought to the knowledge of the Board of Directors of the Bank for meticulous compliance.”

Faced with a situation where a significant number of staff were due to retire, most public sector banks have been actively recruiting to fill the vacancies and were keenly awaiting the Supreme Court judgment on the issue.

“Public sector banks had largely stopped visiting business schools for placements after the Bombay High Court verdict last year. The directive is just a re-iteration that the Supreme Court judgment affects all banks and not a single entity,” said a person familiar with the development. (Business Standard)