UFBU opposes Centre’s move to open top PSB, LIC posts to private sector candidates

The United Forum of Bank Unions (UFBU), representing nine national trade unions of officers and workmen across the banking sector, has strongly opposed the Centre’s recent decision to allow private sector candidates to be considered for top leadership posts in public sector banks and insurance companies, terming it an “attack on the public character” of India’s national financial institutions.

In a statement issued on Friday, the UFBU conveyed its “unequivocal and strongest protest” against the executive orders of the Appointments Committee of the Cabinet (ACC), dated October 4, 2025. The orders approved revised consolidated guidelines for the appointment of Whole-Time Directors, Managing Directors, Executive Directors, and Chairpersons in public sector banks (including the State Bank of India), as well as in the Life Insurance Corporation of India and non-life insurance companies.

The UFBU argued that these guidelines — issued without any amendment to the enabling Acts such as the State Bank of India Act, 1955; Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980; and the LIC Act, 1956 — amounted to a “serious legal and constitutional transgression” and effectively signaled “a de facto privatisation of leadership in statutory public institutions.”

“Public Sector Banks, including the State Bank of India, represent national trust and serve every section of society. Their leadership carries a sovereign responsibility to the people of India, not a corporate mandate. Diluting this statutory responsibility by importing private-sector executives risks undermining their public ethos and accountability,” the UFBU said.

The forum also criticised the new guidelines for removing the traditional APAR (Annual Performance Appraisal Report)-based evaluation system and replacing it with “behavioural assessments” conducted by private HR agencies. “This undermines transparency, introduces subjectivity, and opens the door to bias and cronyism,” it said.

According to the UFBU, the executive action bypasses Parliament, violates statutory provisions, and threatens the morale of public sector employees. “Opening the top echelons to private executives while career public sector bankers remain ineligible will demoralise the cadre and erode institutional memory built over decades,” the statement said.

The unions also warned that the move could set a “dangerous precedent,” shifting leadership of national institutions from public accountability to corporate control. “This is not a policy adjustment but a structural assault on India’s public-sector edifice,” the UFBU said, adding that even previous experiments such as deputing IAS officers to SBI’s top management “had failed due to lack of domain expertise and internal resentment.”

Calling for immediate intervention, the UFBU demanded that the revised ACC guidelines be kept in abeyance pending a comprehensive review and referred to the Parliamentary Standing Committee on Finance. It also sought the formation of a Joint Stakeholder Committee comprising representatives from the Department of Financial Services, RBI, FSIB, UFBU, and legal experts to review the leadership appointment framework for all public sector banks and insurance institutions.

“Public-sector banking and insurance are not commodities for experimentation; they are constitutional instruments of economic justice and national sovereignty,” the statement concluded. “We will not allow their statutory character to be diluted or privatised through executive backdoors.”