The government decision to appoint managing directors and chief executives from the private sector in two top public sector banks – Bank of Baroda and Canara Bank – has come under the attack from bank employees and unions.
The government, instead of messing up with PSU banks further, should focus on recovery of bad loans stuck with corporates, they said. The All India bank Employees Association (AIBEA) said, “private sector executives heading PSU banks is not a good move. We will be shortly organising protest programmes throughout the country against these decisions.” The government last week appointed P S Jayakumar (53) as MD and CEO of VBHC Value Homes Ltd to head Bank of Baroda while MD and CEO of private lender Laxmi Vilas Bank Rakesh Sharma (57) was selected to head Canara Bank.
According to CH Venkatchalam, General Secretary, AIBEA, the main issue facing the banks today is the mounting non-performing assets “and it is no secret that the main contributor for this problem” is the private sector. “We have experienced how some of the private sector executives have messed up some of the private banks which later had to be salvaged by takeover by PSU banks,” he said. Terming the move as a “definite step towards diluting the public sector character of the banks”, he said private sector and private sector banks have their own sphere of working and operation and mixing up with PSBs will be in the wrong direction. ”The physics of private sector banking will not tally with the chemistry of public sector banks,” Venkatchalam said.
The bad loans of banks had risen to Rs 2,97,000 crore — excluding another Rs 4,03,004 crore of stressed loans of 530 corporate companies shown as rescheduled and restructured loans under the CDR scheme. Bad loans stuck in top 30 borrowal accounts of PSU banks as of March 2015 is Rs 121,162 crore. “All these are private corporate companies which had defaulted and it is an irony that the government is trying to make the executives of the private sector to head the glorious public sector Banks. It is nothing but an attempt to build a private sector superstructure with the help of the public sector infrastructure,” unions said.
While so much has been talked about by the government on increasing bad loans, there are no concrete measures to recover the same through stringent measures, he said.