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HomeEconomyUnder Modi govt, top bosses of PSU banks have stopped getting extensions

Under Modi govt, top bosses of PSU banks have stopped getting extensions

In the past six years, at least six top public sector bankers have not been given an extension by the Modi govt, despite being eligible for it.

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Mumbai: What is common to P. Ramana Murthy, Rajesh Kumar Yaduvanshi, Rajeev Rishi, P.S. Jayakumar, Arun Kaul and K.R. Kamath, apart from the fact they were all public sector bankers? All their careers in public banks ended prematurely, even before they hit the retirement age of 60 — despite being eligible for extension, none of them received it.

The trend is not limited to these six individuals — since the Narendra Modi government came into power in 2014, several top public sector bankers have not been given extensions, something that was previously unheard of.

Murthy and Yaduvanshi were executive directors in public sector banks, while the other four were chief executives — both ranks to which officials are appointed by the government. Earlier, the top post in public sector banks was chairman and managing director (CMD), which was later bifurcated into MD and CEO, and non-executive chairman.

Bankers say that due to this uncertainty over extensions at the top, many mid-level officers like chief general managers, who have age on their side, are opting to shift to private sector lenders.

In the last five years, public sector banks have lost significant market share to private sector banks, in terms of both loans and deposits.

Also read: Reduce stake in PSU banks to 50%, provide job incentives to firms — CII’s wishlist for Budget

Six-year trend

One of the earliest examples of this trend of non-extension came in October 2014, when K.R. Kamath, CMD of Punjab National Bank, did not get an extension despite having a year left before retirement.

Arun Kaul, CMD of UCO Bank, also didn’t get an extension in August the next year, about a year before his scheduled retirement.

Rajeev Rishi, who was the MD and CEO of the Central Bank of India, was also one year short of retirement when his term wasn’t extended, in July 2018.

In April 2019, Yaduvanshi was appointed executive director of PNB till October 2020. His term was not extended even though he was three months short of turning 60.

Ramana Murthy, was appointed executive director of the Central Bank of India on 17 February 2017 for three years, and ended his term on 15 February 2020, four and a half years before his scheduled retirement.

P.S. Jayakumar, former MD-CEO of Bank of Baroda had a slightly different experience. He came from the private sector when the government experimented with the idea of attracting talent from outside, and was appointed in 2015 for three years. He did get a one-year extension in 2018, but at the end of that in 2019, his tenure was not extended though he was three years short of age 60.

Why govt is doing this

The government hasn’t officially given any reason for not extending the tenures of these bankers, but in some cases, adverse reports from the Central Bureau of Investigation and Central Vigilance Commission have been cited, sometimes unofficially.

The appointments committee of the cabinet, which is headed by the prime minister, needs clearances from investigative agencies before making the appointment.

Bankers say the problem is because executive directors and MDs are appointed at a relatively earlier age than before. “In the past, CMDs hardly had two-three years of tenure remaining when they were appointed, except for a few. In some cases, the CMD had less than one year,” said a former chairman of a public sector bank, on the condition of anonymity.

“Now there are many executive directors who are appointed in their early fifties and CEOs who are in their mid-fifties. The present government typically gives the ED, CEOs a three-year tenure,” the ex-chairman pointed out.

Before the policy changed, the UPA used to give extensions to top bankers. For example, M.V. Nair, who was appointed CMD of the Union Bank of India for five years in 2006, had his term was extended till he superannuated in March 2012.

Also read: In just 5 years, private banks have narrowed public sector’s huge lead in loans & deposits

Leadership issues

According to analysts, public sector banks have had leadership issues for a long time, and the government should look at them as part of the reform process.

“The government should probably find ways to give a longer tenure for managing a bank, so that it can show that public sector banks have the capability to perform and gain market share,” said Siddharth Purohit, research analyst with SMC Global.

Another veteran banker who did not want to be identified said the trend of giving executive directors charge of bigger public banks like PNB, Bank of India, Union Bank and Canara Bank is a departure from what happened earlier, when smaller banks’ CEOs were appointed as heads of the larger ones. The previous UPA started this executive directors’ trend towards the end of its second term.

“Appointing chief executives of smaller banks to bigger banks was a tried and tested formula. There was no need to deviate from that practice. Promoting an executive director directly to a large bank creates pressure which hampers performance — if performance is the reason why the government has been denying extensions,” the banker said.

Also read: Public sector banks to clear pending vigilance cases against officials: Nirmala Sitharaman


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  1. Probably, you should praise Modi for not rocking the boat. Instead of sacking them, who were adept at phone banking, he has allowed them to retire gracefully.

  2. TS Darbari – The government’s unflinching resolve to keep infusing thousands of crores of rupees of public money to revive profusely bleeding public sector enterprises does not seem to be well thought out. For long we have failed to comprehend why would the government continue to be in business, from flying to mobile-telephone services. On his maiden official US visit as Prime Minister, Narendra Modi had said that it was not the government’s business to do business, its job was that of a facilitator to create new opportunities. But the way the loss-making PSUs continue to operate with impunity at the cost of the country’s growth puts a question mark on the government’s position. #TS_Darbari #Ts_Darbari_Blog #TS_Darbari_News #Ts_Darbari_Views #Ts_Darbari_Blogger #TS_Darbari_Comments #Ts_Darbari_Opinion #About_TS_Darbari #TS_Darbari_Articles #Politics #Views #Comments #who_is_TS_Darbari #About_TS_Darbari #Who_is_TS_Darbari
    Who is TS Darbari?
    Mr. TS Darbari is a top management professional, with several years of rich & diversified experience in Corporate Strategy, New Business Development, Sales & Marketing, Commercial Operations, Project Management, Financial Management and Strategic Alliances

  3. When large scale scams and irregularities are taking place why heads of the banks should get extensions? Extensions leads to hamper succession plans of deserving candidates.

  4. When the Banks, these extension seekers come from have not really covered to themselves in Glory could they have been the bright spots in the organizations? The protections they get from the unions and associations is regardless of their performance leading to rewards being claimed as rights. . They go to private sector where the shape up or ship out.

  5. All these public Bank managers , directors are corrupt and they are involved in all bank scans, congress government looted the nation with the help of these bank directors and chairmen’s , congress government gave extension to all these corrupt people, Present BJP government won’t allow any corruption hence no extensions .

  6. The retirement age of PSBanks are fidedas 58/60. Then why what is the need for their extension of service? >If it was extended the junior below ranks were affected. Most of the PSBnaks chiefs were appointnted by the Congrss govt/ by ex FM, all otherm involved in mass corruption and earned mass wealth. So the action taken by Modjji govt is 100% correct. If any body found corrupted their entire family waalth should be seized by the govt and they should by put into life imprisonement which teaches lessons to others.

  7. That’s a very good thing; not extending the jobs of heads of PSU banks. Most of the NPAs were generated by the actions of PSU heads, and the more time these guys remained as the head, the more they were misused to get loans. In fact the jobs of these guys were extended only for misuse.

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