Bank unions slam govt move to open PSB, LIC top posts to private sector
New Delhi, Oct 10, 2025
UFBU calls new ACC guidelines a de facto privatisation of leadership and urges government to review the move through a joint stakeholder committee
The United Forum of Bank Unions (UFBU), representing nine unions of officers and workmen across public sector banks (PSBs) on Friday strongly opposed the Centre’s recent move to open up top management positions in PSBs, the Life Insurance Corporation of India (LIC), and non-life insurance companies to private sector candidates. Calling it “an attack on the public character of national institutions”, the UFBU has demanded immediate withdrawal of the revised consolidated guidelines issued by the Appointments Committee of the Cabinet (ACC).
Some senior bankers have also expressed concern, calling the move a serious threat to the security and integrity of PSBs. “This poses a serious risk to the institutional framework and culture of PSBs. The strength of institutions like SBI lies in the fact that a probationary officer can, through years of service and experience, rise to become the chairman of the bank. This tradition exists across all PSBs. Allowing external entrants at the top may disrupt this system, and affect operational decision-making as the managing director’s (MD’s) position is central to the bank’s functioning,” said a senior public sector banker on condition of anonymity.
In a detailed statement, the UFBU said the new rules allowing private sector executives to be considered for posts such as MD, executive director (ED), whole-time director (WTD), and chairperson in public financial institutions are “a serious legal and constitutional transgression” that effectively amounts to “a de facto privatisation of leadership”. The unions noted that these changes were introduced without amending the relevant statutes — including the State Bank of India Act, 1955; the Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 & 1980; and the LIC Act, 1956 — all of which require parliamentary sanction.
“PSBs like SBI represent national trust and are instruments of financial inclusion, not corporate enterprises driven by profit motives,” the statement said. The UFBU warned that allowing private sector leaders to helm these institutions would dilute their statutory responsibility, undermine accountability to Parliament, and erode the ethos that has guided them since nationalisation.
The forum also criticised the removal of Annual Performance Appraisal Report (APAR)-based evaluation for top posts, replacing it with “behavioural and competency assessments” by private HR agencies. Such a shift, the UFBU argued, “reduces transparency, invites bias and cronyism, and weakens vigilance oversight”.
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The forum cautioned that opening leadership roles to private sector candidates would “demoralise” career public sector bankers, disrupt internal succession systems, and lead to the erosion of institutional memory. It described the move as a “dangerous precedent” that converts public sector leadership into “open-market appointments”, undermining decades of public service tradition.
The UFBU has urged the government to immediately keep the new ACC guidelines in abeyance, and constitute a Joint Stakeholder Committee comprising representatives from the Department of Financial Services (DFS), the Reserve Bank of India (RBI), Financial Services Institutions Bureau (FSIB), the UFBU, and independent jurists to review the entire appointment framework. It has also sought a detailed review of the policy by the Parliamentary Standing Committee on Finance, and insisted that all future reforms in public financial institutions be placed before Parliament for debate and consultation.
“The public sector banking system is the backbone of India’s economic sovereignty. We will not allow its statutory character to be diluted or privatised through executive backdoors,” the UFBU declared.
[The Business Standard]
