Eight PSU banks functioning without non-executive chairmen

Eight of India's 11 public sector banks, excluding State Bank of India, currently have no non-executive chairman, according to latest Financial Services Institutions Bureau data. Only Bank of India, Indian Overseas Bank and UCO Bank have one. The vacancy runs eight years at Indian Bank and 11 years at Bank of Maharashtra, vacant since 22 April 2015. The gap gains significance under RBI's new governance framework, issued 14 July and effective 1 October. Banks and the finance ministry did not respond.

Written by AI from RBI · not yet reviewed by an editor · Published 28 Sept 2026, 6:10 am IST

Source

RBI · read the original report ↗

#psu banks#rbi#governance#banking#fsib

Desk check · compared with the source

What the desk checked (5)

Eight of India's 11 public sector banks, excluding SBI, lack a non-executive chairman; only Bank of India, Indian Overseas Bank and UCO Bank have one. — Attributed to latest Financial Services Institutions Bureau data reviewed by Mint; figures internally consistent.
Vacancies range from 8 years at Indian Bank to 11 years at Bank of Maharashtra, whose post is vacant from 22 April 2015. — Dates appear in source and match the stated durations approximately; drawn from the FSIB database.
Canara Bank, Punjab National Bank and Union Bank of India have had no non-executive chairman since 7 November 2025. — Figure appears in source, cited to the current FSIB database; no independent confirmation possible.
A new RBI governance framework was issued on 14 July and is effective from 1 October. — Stated in source without document reference; year not specified.
The government is not prioritising filling vacancies. — Opinion attributed by name to former finance secretary Subhash Chandra Garg; no official explanation available as banks and DFS did not respond.

Written by AI from RBI · not yet reviewed by an editor · How we use AI · Report an error

Analysts’ view opinion

AI Economic Analyst

This is not merely a headcount of empty chairs — it speaks to the quality of board oversight at institutions handling public money, and that has a measurable economic value. With the RBI's new governance framework effective 1 October placing primary responsibility for the board agenda on the chairperson, having the post vacant at eight of 11 public sector banks exposes a gap between regulatory intent and practice. Day-to-day operations continue under the MD & CEO, so there is no immediate operational disruption; the risk is a thinner independent check on risk management and strategy, which experts in the story describe as a lead indicator of weak governance.

Public sector banks are government-owned but also listed, so any governance shortfall is ultimately borne by minority shareholders, depositors and, in the last resort, taxpayers.
Governance quality is priced by markets — doubts about independent oversight are among the factors that can sustain the valuation discount public sector banks typically carry versus private peers.
Boards already have heavy representation from executive directors, managing directors and government nominees, so a vacant chair can further dilute independence, as experts cited in the story caution.
The 2015 separation of chairman and managing director roles was a reform meant to strengthen checks and balances; multi-year vacancies erode the economic benefit that reform was designed to deliver.
The story notes appointments can take more than six to seven months, so some delay is procedural — but that does not explain gaps of eight to eleven years.

What to watch — Watch the pace of FSIB recommendations and Department of Financial Services appointments, and whether the RBI clarifies who discharges the chairperson's governance role while the seats remain empty.

The story does not establish that any specific governance failure, loss or financial impact has occurred at these banks, and no public government explanation for the delays is available.

Deep dive

Research brief · 8 facts · 8 dates · exam-ready

The brief

Context

India's public sector banks are government-controlled but stock-exchange listed, and their boards are meant to be led by a non-executive chairman who is separate from the managing director and CEO. This separation, a governance reform intended to create checks and balances between board and management, followed the splitting of the combined chairman-and-managing-director post. Latest Financial Services Institutions Bureau (FSIB) data reviewed by Mint shows eight of 11 PSU banks (excluding SBI, which has an executive chairman) have no serving non-executive chairman, some for years. The gap matters more now because a new RBI governance framework for banks, issued on 14 July and effective 1 October, places primary responsibility for setting the board's agenda on the chairperson.

Key facts

Eight of India's 11 public sector banks, excluding State Bank of India, currently have no non-executive chairman, per latest FSIB data reviewed by Mint.
Only Bank of India, Indian Overseas Bank and UCO Bank have a serving non-executive chairman.
Bank of Maharashtra's post has been vacant since 22 April 2015, after the separation of the chairman and managing director posts — about 11 years.
Indian Bank's post has been vacant since 14 August 2018, a gap of about eight years.
Canara Bank, Punjab National Bank and Union Bank of India have been without a non-executive chairman since 7 November 2025.
Other vacancy dates: Bank of Baroda from 1 March 2024, Punjab & Sind Bank from 7 November 2024, Central Bank of India from 23 May 2021.
RBI's new governance framework for banks was issued on 14 July and takes effect from 1 October; it is silent on who performs the chairperson's governance role if the post is vacant.
Emails to the Department of Financial Services and all eight banks drew no response by press time.

Timeline

22 April 2015Bank of Maharashtra's non-executive chairman post falls vacant, following separation of the chairman and managing director posts.
14 August 2018Indian Bank's non-executive chairman position becomes vacant.
23 May 2021Central Bank of India's non-executive chairman position becomes vacant.
1 March 2024Bank of Baroda's non-executive chairman position becomes vacant.
7 November 2024Punjab & Sind Bank's non-executive chairman position becomes vacant.
14 JulyRBI issues its new governance framework for banks, assigning the chairperson primary responsibility for setting the board's agenda.
7 November 2025Canara Bank, Punjab National Bank and Union Bank of India are left without a non-executive chairman.
1 OctoberRBI's new governance framework comes into effect.

Who has a stake

Eight PSU banks without a non-executive chairman — Board leadership, policy direction and independent oversight of management may be weakened while the chair stays vacant.
Reserve Bank of India — Its new framework effective 1 October makes the chairperson central to board agenda-setting, yet is silent on vacant chairs; its guidelines allow the MD to preside in the chairman's absence.
Financial Services Institutions Bureau (FSIB) — Recommends candidates for whole-time directors and non-executive chairpersons at PSU banks, financial institutions and state-owned insurers.
Department of Financial Services, finance ministry — Handles policy on PSU banks and appointments; did not respond to queries on the eight vacancies.
Depositors, minority shareholders and markets — PSU bank boards are accountable under both banking and securities-market frameworks; weak board independence affects public money and listed-entity governance.
MD & CEOs and independent directors — With a vacant chair and slim independent-director presence, the MD may preside over board meetings, blurring the separation of board and management.

Why it matters

PSU banks handle public money and are listed, so their boards answer to both banking and securities regulators; a chair left vacant for up to 11 years dilutes the independent oversight that separating the chairman and MD posts was meant to create. With RBI's new framework from 1 October resting board agenda-setting on the chairperson, the vacancies leave a governance gap the rules do not address. Experts quoted call a vacant chair a lead indicator of weak governance at a public sector bank.

UPSC angle

Prelims pointers

FSIB (Financial Services Institutions Bureau) recommends senior leadership appointments — whole-time directors and non-executive chairpersons — at PSU banks, financial institutions and state-owned insurers.
SBI is led by an executive chairman; other PSU and private banks are led by an MD & CEO.
RBI's new bank governance framework: issued 14 July, effective 1 October; chairperson has primary responsibility for the board's agenda.
RBI guidelines permit the managing director to preside over board meetings in the absence of the chairman.
Bank of Maharashtra's chair has been vacant since 22 April 2015; Indian Bank's since 14 August 2018.
Public sector banks are government-owned with the Centre holding the controlling stake and are also listed on stock exchanges.

Mains framing

The prolonged absence of non-executive chairmen at eight of 11 public sector banks illustrates how a governance reform can be hollowed out in implementation. The separation of the chairman and managing director posts — the reason Bank of Maharashtra's chair fell vacant on 22 April 2015 — was designed to create checks and balances between board and management, yet delays in appointment have left the chair empty for eight to 11 years in some banks and more recently at Bank of Baroda, Punjab National Bank, Canara Bank and Union Bank of India. Causes cited in the source include an appointment process that can take more than six to seven months, slow internal succession planning, and, in former finance secretary Subhash Chandra Garg's view, a lack of government priority. The implications are structural: with boards dominated by executive directors, managing directors and government nominees, independent director presence is thin, and a vacant chair further dilutes board independence, which Grant Thornton Bharat's Vivek Iyer calls a lead indicator of weak governance. RBI's framework effective 1 October raises the stakes by vesting agenda-setting in the chairperson while remaining silent on who discharges that role when the seat is empty, even though the MD may preside over meetings. The way forward implied by the source is timelier FSIB-recommended appointments, clearer regulatory treatment of vacant chairs, and equal governance attention to public- and private-sector banks.

Key terms

Non-executive chairman: A board head who is not part of daily management, providing board leadership, broad policy direction and oversight of governance.
FSIB: Financial Services Institutions Bureau; recommends candidates for whole-time directors and non-executive chairpersons at PSU banks, financial institutions and state-owned insurers.
MD & CEO: Managing director and chief executive officer, the executive head of PSU and private banks other than SBI, which has an executive chairman.
RBI governance framework (2025): RBI norms issued 14 July, effective 1 October, making the chairperson responsible for the board agenda and the board responsible for strategy, financial soundness, key personnel, governance and risk.
Department of Financial Services: Finance ministry department responsible for policy matters concerning PSU banks and financial institutions.
Separation of chairman and MD posts: A reform splitting the combined role to create greater checks and balances between the board and management.

Practice questions

Examine how prolonged vacancies in the post of non-executive chairman affect board independence and governance at public sector banks.
"Separating the chairman and managing director posts strengthens checks and balances only if appointments are timely." Discuss with reference to India's PSU banks.
Discuss the role of the Financial Services Institutions Bureau in senior appointments at state-owned financial institutions and the challenges in its functioning.

Grounded only in the source report — figures and dates are the source's, not inferred.

Next storyLower costs must benefit policyholders, says Irdai chairman →

← All stories