The recent exits of some senior officials from public sector banks (PSBs), hired from the private sector, has sparked debate in the banking sector about the relevance of lateral hiring from private banks.

These exits have come at a time when Union Finance Minister Nirmala Sitharaman said recently that PSBs need high quality professionals, including those from the private sector to grow business.

Last month, Union Bank of India Chief Digital Officer (CDO) Rajnish Khare resigned from the bank after a mere 15 months tenure, despite having a five year contract with the bank while Yusuf Roopawalla,CDO of Bank of India, resigned in January this year.

Contrary to the silent exits of these two officials, Bank of Baroda (BoB) CDO Akhil Handa’s exit in November last year got wide publicity due to the BoB World app mishap.

“I tried changing things but it was simply not worth it. I had to quit,” says a senior banker who was hired from the private sector by a large PSB recently.

Meanwhile, Roopawalla, who worked with Standard Chartered Bank as Chief Information Officer (CIO) for over 30 years, was appointed as Chief Technology Officer (CTO) by Bank of India in July 2023, and left the bank in January 2024, a mere seven months stint.

According to sources, Roopawalla wanted to lead the digital banking operations of the bank entirely, but as he had to report to the chief general manager, he tendered his resignation citing personal reasons. Roopawalla has now returned to the private sector, serving as CIO of Unity Small Finance Bank since February 2024.

Separately, Ritu Jhajharia, who was a private sector employee and was appointed as the head of digital marketing by Union Bank in June 2023, quit the bank in November 2023, after just six months. Amit Sharma, who was heading Union Bank’s learning academy division, also quit before his tenure. Union Bank did not respond to queries sent by FE till press time.

According to sources, several other senior officials in large PSBs hired from the private sector are looking at the exit door.


Why the exits?

Officials from private banks may face resistance from existing officials due to the wide pay gap, said the HR head of a PSB. “The total cost-to-company of existing digital officers, having chief general manager rank, is around Rs 70-75 lakh per annum and it includes all the allowances while the candidates from private banks are offered upwards of Rs 1 crore for the same position,” they said.

Further, one official who recently quit from a large PSB after being hired directly from the private sector, said employees—especially those in commanding positions at large PSBs—do not cooperate fully with officials like him who come from private sector.

“Some people like us (private sector hires in PSBs) do not work for glory, but by denying us permission to do the right things, these officials want to show that private sector lateral hirings in PSBs do not work,” they said. “This entirely derails the government’s agenda of bringing the best of talents in the public sector,” they add.

In November 2023, after the Reserve Bank of India (RBI) barred BoB from onboarding new customers on its flagship BoB World app, Handa quit from his position. BoB MD, CEO Debadatta Chand, however, had then countered Handa’s stance saying his contract was terminated, along with several staffers, for the BoB World mishap.

Handa, meanwhile, claimed that he had resigned, and the management was just “deflecting from its operational lapses” by saying it terminated employees.

According to a retired PSB chief, the expectations are very high in PSBs on digital banking vertical as they are lagging behind private banks. When a public sector bank hires an official from private bank, he is expected to produce results in a short period of time, he said. They may not be able to live up to the high expectations, he added.

“Decision making process is slow in public sector banks because every decision taken by the official is under the lens of higher officials while private banks give a free hand to take risky bets. The decision making process is well defined and time taking while in private banks, the decision making is fast,” he said.