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Need to draft appointments policy for financial institutions

I believe there is a difference between simple carelessness and criminal negligence. But when it comes to the manner in which the Indian bureaucracy is handling the nation's most important financial institutions, I really cannot see any difference in the final result: total chaos, whether by lack of foresight or thanks to malice aforethought.

Is that an exaggeration? I do not think so given the disdain with which the civil service has treated the State Bank of India and the Life Insurance Corporation. The first of the two is the largest bank in the country, operating 14,000 branches (along with all its subsidiaries), and handling day-to-day Treasury operations for the Government of India itself. The Life Insurance Corporation, a monopoly, has Rs 1,470 billion to invest. You would imagine, wouldn't you, that it would be a matter of immense concern to ensure that these institutions have only the finest heads, and, equally important, that these men are given sufficient time to prove their mettle?

What constitutes "sufficient time"? The Reserve Bank of India feels that the chairmen should enjoy a three-year tenure. The Union Ministry of Finance says that two years is an appropriate period. But what are the facts?

How have the last five chairmen of the State Bank of India, up to and including the current incumbent, fared? Let me count backwards.

The current incumbent, G G Vaidya, shall have had nineteen months in office. His immediate predecessor, Radhakrishnan, had a mere two months. M S Varma had nineteen months, and so and so forth. To cut a long story short, between September 1, 1995 and today, there have been no less than five chairmen in the State Bank of India. Whatever became of the recommendation that the man who holds that post should have two years at least?

So much for the past. Without wasting further tears over spilt milk, let us hope for something better in the future. Unfortunately, a look at the records tells me that the immediate future is not likely to be any better. If anything, it will be even worse. Let us assume that the civil service insists on maintaining the sacred principle of seniority. Here then is the list of who shall follow, and how long they shall stay in office.

S K Mukherjee will have one month in office. V Kamesan will have ten months. Y Radhakrishnan has nine months to go. S Govindrajan has one month. R Sudaman will have two months. Janki Ballabh has one month. R K Batra has ten months. Finally, Krishnamachari will have eleven months.

I will not bore you any further. But what that long list means is that the State Bank of India shall have no less than eight chairmen between now and July 2004. If the thought of having five chairmen in five years is grotesque, what do you think of having eight in four years? An average of six months suddenly makes that earlier mean term of one year look rather healthy, does it not?

The State Bank of India is due to face new challenges as the full impact of globalisation hits India in the years to come. But who is there to provide India's largest bank with a coherent strategy to meet new challenges? When you inaugurate an era of revolving-door chairmen, one of two things will happen: either each new incumbent shall change his predecessor's strategy to prove that there is a new boss, or he will refuse to take account of rapidly changing circumstances because of sheer force of inertia. Can the State Bank of India afford either situation?

The real problem is that this foolish and short-sighted policy is not limited to the State Bank of India, but is a disease that has spread to other wings of the government. I mentioned the Life Insurance Corporation; when the incumbent chairman retires in a few weeks, we shall see three chairmen coming and going in a period of two years. Is that the kind of guidance required by the Life Insurance Corporation just when the insurance sector is opening up after years of monopoly?

Frankly, the Government of India needs to formulate a policy on appointments where important institutions are concerned. First, I would suggest that the major point should be to ensure that the best man gets the job irrespective of seniority. Second, once in office, he or she should be granted a two-year tenure; if his or her sixtieth birthday comes in the middle of that term, then so be it, let him carry on.

T V R Shenoy

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