New Delhi/Mumbai: In a major revamp of the selection process for chiefs of state-run banks, officials from private sector banks will be eligible to compete with public sector counterparts for the vacant posts of managing director (MD) and chief executive officer (CEO) at five state-run banks.

The appointments panel of the cabinet headed by Prime Minister Narendra Modi approved the criteria and method of selection of MD and CEO for Bank of Baroda, Punjab National Bank, Bank of India, Canara Bank and IDBI Bank Ltd, the finance ministry said in a statement.

The candidate should be in the age group of 45-55 years and will have a fixed tenure of three years, subject to the usual age of superannuation of 60 years, the statement said. The candidates should have 15 years of banking experience, of which three years should be at the board level.

The criterion that candidates should have at least three years of experience at the board level may be too steep a requirement, said a former bank chairman.

“A private sector banker with three years of board experience is a very senior banker. When such a senior banker moves, he prefers to move with his entire core team, which is not possible in public sector banks. It is a threatening situation for them to be all alone at the top," said the banker, who moved to the private sector after retirement.

He also spoke about the onerous scrutiny that public sector bankers are subjected to over decisions that are long past.

“When he (private sector banker) comes across the kind of paperwork that we had to do just so that we are not disturbed by investigative agencies 10 years after retirement, there will be no joy left in such a job," the banker said.

Another former bank chairman said the fixed tenure of three years is too short for a private sector executive who typically has a tenure of 5-10 years.

According to Saikiran Pulavarthi, an independent banking analyst, private sector bankers will not be interested in joining state-run banks for the kind of compensation that’s typically offered in the public sector.

For example, HDFC Bank Ltd’s managing director and chief executive officer (CEO) Aditya Puri earned 6.07 crore in fiscal year 2013-14, becoming the highest paid bank CEO in the country. ICICI Bank Ltd’s managing director Chanda Kochhar received a remuneration of 5.23 crore in the same year.

Compared with that, the chairperson of State Bank of India (SBI), Arundhati Bhattacharya, earns less than 24 lakh a year. The compensation paid to the SBI chief is 1.7 lakh per month plus perks. However, bankers say money only is not a motivation for people at the highest level. Any private sector banker applying for a job at a state-run bank may have earned and saved enough in his career and may like a shot at turning around a public sector unit.

The government in October had scrapped the selection process of bank chairmen after Syndicate Bank chairman S.K. Jain was caught for allegedly seeking bribes for loans.