Recent departures of senior officials from public sector banks (PSBs), recruited from the private sector, have ignited discussions within the banking sector regarding the efficacy of lateral hiring from private banks.
These exits coincide with Union Finance Minister Nirmala Sitharaman's recent statement emphasising the necessity of high-quality professionals, including those from the private sector, to bolster the growth of PSBs.
Last month, Union Bank of India's Chief Digital Officer (CDO), Rajnish Khare, resigned from his position after a brief 15-month tenure, despite having a five-year contract. Similarly, Yusuf Roopawalla, CDO of Bank of India, stepped down in January this year.
In contrast to these quiet departures, the exit of Bank of Baroda's (BoB) CDO, Akhil Handa, in November last year garnered widespread attention due to the BoB World app incident.
"I attempted to enact change, but it proved futile. Resigning was my only option," remarked a senior banker hired from the private sector by a major PSB recently.
Meanwhile, Roopawalla, with over 30 years of experience at Standard Chartered Bank as Chief Information Officer (CIO), joined Bank of India as Chief Technology Officer (CTO) in July 2023, only to depart in January 2024, citing personal reasons. He has since returned to the private sector, serving as CIO of Unity Small Finance Bank since February 2024.
Additionally, Ritu Jhajharia, appointed as Union Bank's head of digital marketing in June 2023, resigned after just six months. Amit Sharma, who led Union Bank's learning academy division, also left prematurely. Union Bank did not respond to queries from FE.
According to sources, several other senior officials hired from the private sector by large PSBs are contemplating leaving.
Challenges in Lateral Hiring
Officials from private banks may face resistance from existing PSB officials due to significant pay discrepancies, with private sector candidates offered higher salaries for similar positions.
Moreover, individuals from the private sector often encounter reluctance from PSB employees, particularly those in influential roles, who may impede their efforts to institute positive changes.
In November 2023, following the RBI's directive prohibiting BoB from onboarding new customers on its BoB World app, Handa resigned. BoB's MD and CEO Debadatta Chand, however, contended that Handa's contract was terminated alongside several other staff members due to the BoB World mishap.
Handa, on the other hand, asserted that he had voluntarily resigned, and the management was attempting to divert attention from its operational oversights by claiming termination.
According to a retired PSB chief, PSBs have lofty expectations for their digital banking verticals, often expecting rapid results from officials hired from the private sector. However, the decision-making process in PSBs tends to be slower and more scrutinized compared to private banks, where decision-making is swift and less encumbered.
In conclusion, the challenges associated with lateral hiring from the private sector highlight the contrasting dynamics between PSBs and private banks, underscoring the need for alignment and adaptability in integrating professionals from diverse backgrounds into the public sector banking domain.