Split CEO, chairman posts in banks: RBI governor

August 23rd, 2011 - 2:45 pm ICT by IANS  

Mumbai, Aug 23 (IANS) The posts of chairman and chief executive officer (CEO) of public sector banks should be bifurcated to ensure effective checks and balances, Reserve Bank of India Governor D. Subbarao said Tuesday.

“We will discuss this issue with the government,” Subbarao said while addressing a conference organised here jointly by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Indian Bank’s Association.

He said bifurcation of the posts of chairman and CEO of private sector banks had worked well and it should be implemented in government-run banks as well.

“Given our own positive experience as well as the global endorsement for this position, the question is whether we should extend the principle of separation of the posts of chairman of the board and CEO to public sector banks as well,” he said.

“An important criterion for deciding on this will be to what extent we will be able to lay down and enforce strict eligibility criteria for the position of the chairman of the board of a public sector bank,” Subbarao added.

The posts of chairman and CEO of private sector banks were bifurcated following an expert committee recommendations in 2007.

“Such a bifurcation of leadership of the board from the day to day running of the business will bring about more focus and vision as also the necessary thrust to the functioning of the top management of the bank. It will also provide effective checks and balances,” the RBI governor said.

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