The government on Thursday approved new norms for the selection of managing directors and chief executive officers at five public sector banks (PSBs), paving way for the appointment of private sector candidates with flexible salary packages. 

The five banks are Bank of Baroda, Punjab National Bank, Bank of India, Canara Bank and IDBI Bank. 

Government and non-government candidates can apply for these positions, the finance ministry said in a statement. "The Appointments Committee of Cabinet (ACC) has approved the criterion and method of selection," it said, adding that candidates should have at least 15 years of mainstream banking experience, of which a minimum three should be at board level.

Under the new norms, none of the existing executive directors in PSBs will be eligible as they may not have either the requisite board-level experience or fulfill the age criterion. 

The ministry said in its notification inviting applications that salaries would be "flexible". "The candidate should be in the age group of 45 to 55 years and will have a fixed tenure of three years, subject to normal age of superannuation of 60 years," the ministry noted in its statement. 

The three-stage appointment process will start with screening and shortlisting of candidates based on the experience and eligibility conditions. In the second round, candidates will be called for a preliminary meeting by a screening agency to determine eligibility. 

"Candidates duly recommended by the screening agency will be called for the interview," the ministry stated in its notification. Candidates will be eligible to apply for the vacancy in one or all five banks and the last date for submitting the application is March 21. 

Last year, a committee was set up to examine the selection process for CMDs and executive directors of public sector banks for 2014-15. This came after then Syndicate Bankchairman and managing director SK Jain was arrested by the Central Bureau of Investigation for allegedly accepting bribes of Rs 50 lakh to enhance the credit limits of some companies. 

Then Central Bureau of Investigation director Ranjit Sinha had said that Jain was favoured during the appointment process and that the agency had sent a report on this to the finance ministry. The government then cancelled the appointments of eight CMDs and 14 executive directors of state-run banks made by the previous UPA government. 

This was followed by management reforms at public sector banks and it was decided to split the posts of chairman and managing director-cum-CEO. Following this, the government made appointments to leadership positions at United Bank, Oriental Bank of Commerce, Vijaya Bank and Indian Overseas Bank. 

Earlier, the Reserve Bank of India had recommended in a paper that the selection process should be left to an independent panel of experts through openmarket, global advertisements for the chairman's post. It had further recommended that such executives be paid salaries that are comparable with those in other industries. (PTI - Economic Times)