Banking unions oppose government’s decision to open key positions at state-owned banks and insurers to private sector candidates

Forum alleges legal violation of government orders changing PSU leadership norms
Photo credit: NAGARA GOPAL

The United Forum of Bank Unions (UFBU), the umbrella organization of nine unions of officers and workers in the banking sector, has opposed the government’s decision to open key positions in public sector banks, including State Bank of India, and public sector insurance companies to private sector candidates.

The Forum referred to the executive orders issued by the Cabinet Appointments Committee (ACC) on October 4, 2025, which approved ‘revised consolidated guidelines’ for the appointment of Whole-Time Directors (WTDs), Managing Directors (MDs), Executive Directors (EDs) and Chairmen of public sector banks, including SBI, and public sector insurance companies.

The Forum in a statement alleged that these orders, issued without any amendment to the enabling statutes – the State Bank of India Act, 1955, the Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 & 1980, and the Life Insurance Corporation Act, 1956 – constitute a serious legal and constitutional violation and amount to a de facto privatization of leadership in statutory public institutions.

UFBU emphasized that PSBs, including SBI, are not just financial institutions but they represent national trust, serve all sections of society and entrench financial inclusion.

“These are statutory and significant public financial institutions, and their leadership has a sovereign and fiduciary responsibility to the people of India, and not just a corporate mandate.

“Weakening this legal responsibility by importing private sector executives risks undermining the public character of the Bank, their constitutional responsibility and the public ethos and values ​​that have guided these banks since their inception,” the Forum said.

By introducing lateral entry of private sector executives, scrapping the APAR (Annual Performance Appraisal Report)-based merit assessment and deploying private HR agencies for ‘behavioral assessment’ and selection based on ‘interaction’, the ACC guidelines have materially changed the appointment framework created by Parliament, it claimed. UFBU.

It emphasized that such a change cannot be made through executive instruction; it requires legislative changes and parliamentary debates.

“This unilateral policy shift converts public sector leadership roles into open market appointments, dismantling the historical model of career-based succession and institutional continuity in PSBs.

“In the past, even deputation of IAS officers to the top management of the SBI turned out to be a failed experiment, due to lack of domain expertise, disconnect with banking ethos and internal resentment. Reopening such gates under a new nomenclature amounts to the same policy mistake,” the Forum said.

Furthermore, the appointment of outsiders without parliamentary oversight amounts to executive privatization of statutory institutions, endangering financial sovereignty and public trust, the Forum alleged.

Published on October 10, 2025