External hire for 6 state bank MDs spark discontent

A fresh round of speculation has emerged over the possible appointment of executives from private commercial banks as managing directors (MDs) of six state-owned banks, triggering discontent and frustration among senior officials of state-owned banks who have long been seeking promotion to the top positions.

The officials allege that efforts to recruit MDs from outside the state-owned banking sector, while overlooking the promotion prospects of qualified and experienced internal candidates, would deprive them of their legitimate career opportunities. They believe that bypassing competent officials without providing a specific explanation could create significant disparities within the banking sector.

A senior official of a state-owned bank, speaking on condition of anonymity, said there were substantial differences between the management structures of state-owned and private commercial banks. Appointing MDs from private banks while overlooking qualified senior officials within state-owned banks could have a negative impact, the official added.

According to sector insiders, state-owned and private commercial banks differ fundamentally in terms of ownership, administrative structures, accountability mechanisms and human resource management. This has raised questions about the extent to which experience in private banks can be considered directly equivalent to experience in state-owned institutions.

They argue that leadership should preferably be developed from within the state-owned banking sector, where senior officials are already familiar with the institutions' operational procedures and administrative realities.

If the authorities believe that no suitable candidates are available within the state-owned banks for the MD positions, they should provide a clear and transparent explanation, the officials said. They called for the disclosure of how many candidates had been assessed and the criteria used to determine their suitability.

They also stressed that appointments to top executive positions must be based on an impartial assessment of integrity, professional competence and administrative experience. Qualified candidates should not be deprived of promotion simply because they are not on a preferred list, they added.

Officials fear that narrowing internal promotion opportunities would undermine employee morale and motivation, eventually affecting the overall management of state-owned banks. They have therefore urged the authorities to assess the capabilities of existing personnel before considering candidates from outside the sector.

The promotion-seeking officials have also called for a clear explanation of the speculation surrounding the appointments, alongside greater transparency regarding the recruitment policy and the procedures for evaluating candidates.

Although Bangladesh Bank spokesperson and Executive Director Arif Hossain Khan said no decision has been taken on the appointment of MDs to state-owned banks from outside, discussion and speculation on the matter are underway.

Expressing frustration, a deputy managing director (DMD) of a state-owned bank, speaking on condition of anonymity, said senior bankers naturally hoped to become MDs after dedicating their entire careers to serving their institutions.

“That path is now being blocked,” the official said.

The DMD argued that MDs could not be held solely responsible for corruption or the accumulation of defaulted loans in state-owned banks. Political interference and unjustified decisions by boards of directors, the official said, were the principal factors behind such problems.

Bankers have also raised questions about the salary structure and the financial incentives behind the reported interest in the positions.

According to officials, a DMD at a private commercial bank earns around Tk 7 lakh to Tk 8 lakh a month, while the monthly salary of an MD at a state-owned bank is reportedly Tk 5 lakh to Tk 6 lakh.

The difference has prompted questions among some bankers and members of the public about why private-sector executives would be interested in moving to positions with comparatively lower salaries, and whether personal ambition or other considerations might be influencing such interest.