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Professionalism or Instability: What Do Lateral Hirings Bring To Public Sector Banking?
Lateral hirings in Public Sector Banks spark debate, as recent exits of senior officials raise questions about leadership stability and talent retention.

Author: Abhivad
Published: May 29, 2024
The practice of lateral hirings in Public Sector Banks (PSBs) has sparked a debate, as it becomes increasingly prevalent. Lateral hiring involves recruiting experts from outside organisations for specific roles within PSBs.
Recent exits of senior officials from PSBs, previously hired from the private sector, have intensified discussions on the matter. Several senior officials hired from the private sector in large PSBs have recently resigned, sparking attention. In March 2024, Rajnish Khare, Chief Digital Officer (CDO) of Union Bank of India, left the bank within just 18 months of joining, despite having a five-year contract. Yusuf Roopawalla, Chief Technology Officer (CTO) of Bank of India, had also resigned in January 2024 after a short tenure. Roopawalla, with over 30 years of experience at Standard Chartered Bank, served as Bank of India's CTO for only seven months before returning to the private sector as the CTO of Unity Small Finance Bank in February 2024.
The exit of Akhil Handa, CDO of Bank of Baroda, following the BoB World app mishap in November 2023 gained widespread attention. Trade unions had criticised Handa’s lateral recruitment as a key factor contributing to the fiasco. Sanjay Das, General Secretary of the All India Nationalised Bank Officers’ Federation (AINBOF), remarked that the scar left behind by the incident is indelible even after his termination. “Trade unions are always against this lateral entry. Banking is such a service sector where experience is the main attribute of being a prudent banker. There is no alternative to learning through experience. Furthermore, these types of people being put into the higher pedestal without having much knowledge on ground realities have created problems in the past as well”, he wrote in an opinion piece.
Additionally, Ritu Jhajharia, head of digital marketing at Union Bank since June 2023, resigned after six months, along with Amit Sharma, head of Union Bank's learning academy division. According to Financial Express, several others are looking at the exit door. These exits raise questions about the stability of leadership in PSBs and their ability to retain talent from the private sector.
Finance Minister Nirmala Sitharaman in a recent statement emphasised that PSBs are seeking permission to recruit from the market, aiming to ensure high-quality professionals manage the banks. She also noted that PSBs are already engaging in lateral hirings from the market for specialised roles such as digital banking and wealth management. The minister highlighted the growing importance of digital banking, prompting PSBs to hire specialists, even for mid- and junior-level positions, from IT companies and private lenders.
Devidas Tuljapurkar, Former Director of Bank of Maharashtra, shared his perspective with Kanal on the issue. “If specific skill sets or talents required for certain roles are not available internally, hiring from the open market could be justifiable. For instance, in cases where technical expertise in digital banking technologies is lacking internally, lateral hiring from the private sector might be necessary. But it should not be taken as a licence for lateral hiring of banking professionals when PSBs possess ample experience and expertise within their ranks” Tuljapurkar asserted.
The debate surrounding lateral hirings in PSBs underscores the ongoing tension between the need for specialised skills and the utilisation of existing talent within the public sector. While proponents argue for the necessity of recruiting external expertise to fill crucial gaps, sceptics raise concerns about overlooking internal talent pools.