PSBs want cap relaxed for management-level hiring

State-run banks have urged the government to relax the cap that stops them from hiring more people for middle- and senior-level management positions, saying it will boost efficiency, people in the know told ET.

The government has put a cap on the number of chief general managers, general managers and assistant general managers a state-run bank can have, based on their business size. For instance, a bank with an annual business size of ₹1.6 lakh crore can have a maximum of 12 general managers.

Lenders say that consolidation in the banking industry has thrown up the need for more mid-level personnel.

“We have had discussions with the government about making PSBs’ (public sector banks) functioning more efficient and effective, given the growth opportunities and stiff competition from private sector peers,” said a bank executive aware of the development. “We think there are enough reasons to relax these guidelines, which have been in place since 2016.”

The latest round of deliberations on this issue were held last month, said the executive, requesting not to be named.

In 2019, after the merger of 10 nationalised banks created four large lenders, the government allowed banks with a turnover of ₹10 lakh crore and more to create a new post of chief general manager, or CGM. The government said the CGM will act as an administrative and functional layer between the existing levels of general manager and executive director.

Government guidelines say there can be one CGM for four general managers in the bank.

Banks have said that bank boards should be allowed to decide on the number of posts, as per their business needs. “The existing ratio of GM/DGM/AGM is 1:3:9, which is based on 2016 position, and needs to be revisited for better functional control,” said another executive of a nationalised bank. “This will also help in arresting attrition.”

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