New Delhi: In an indication of the growing stress on leadership skills in state-run banks, two firms—Egon Zehnder International Pvt. Ltd and Hay Consultants Pvt. Ltd—have been appointed to assist the Banks Board Bureau in developing strategies for top bank management. These appointments come at a time when public sector banks have been struggling to appoint quality people in top management. It also comes at a time efforts are being made by the government and the Reserve Bank of India (RBI) to revive public sector banks suffering from huge levels of non-performing assets (NPAs) and losses.

Egon Zehnder has been appointed as a knowledge partner to the Banks Board Bureau to design, implement and institutionalise a flagship leadership development strategy for state-run banks in India, said a statement on the BBB website. This should help in training the middle level management at state-run banks to prepare them for top jobs.

Egon Zehnder is a global management consulting and executive search firm. It was recently engaged by Axis Bank to find a successor to Shikha Sharma.

Hay Consultants, part of the Korn Ferry Group, has been appointed to assist the Banks Board Bureau to assess the leadership competencies and potential capabilities of people appearing for the post of whole time directors in state-run banks, the statement added.

The effort to bring in experienced professionals as whole-time directors is part of the focus to ensure more effective monitoring of decisions taken by bank management.

The International Monetary Fund (IMF), in it’s annual assessment of the Indian economy released last week, had flagged the need for improving bank governance, reducing the role of the public sector in the financial system, and enhancing bank lending capacity and practices, thereby reducing the fiscal contingency risks arising from state-run banks in the future.

It recommended more far-reaching governance reforms, including removing RBI representatives from banks’ boards and better defining the terms of reference for board members, including the ministry of finance representative, to strengthen the quality and independence of boards.

In April this year, the government had reconstituted the Bank Boards Bureau under its new chairman Bhanu Pratap Sharma. Pradeep Kumar, former managing director of State Bank of India, and investment banker Vedika Bhandarkar were also inducted into the board. Pradip P. Shah, is the fourth member.

Banks Board Bureau has the task of finalizing candidates for the posts of managing director and executive director at state-run banks.

Gopika Gopakumar contributed to this story.

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