The Government approved the proposal to separate the posts of Chairman and Managing Directors in Public Sector Banks (PSBs). While the Chairman would be non-executive, Managing Director and Chief Executive Officer (MD&CEO) would be the executive head. The splitting of the posts of Chairman and Managing Director is in accordance with the international best practices. While the Chairman would give an overall policy directions to the Bank, MD&CEO would be responsible for day-to-day management of the Bank. The separation would bring in inappropriate checks and balances and there would be accountability at the board level as the person executing will be answerable to a board that is headed by a different non-executive Chairman. The Government has appointed MD&CEOs in five PSBs and the process of selection of Non-Executive Chairman in Public Sector Banks in underway.

 This was stated by Shri Jayant Sinha, Minister of State in Ministry of Finance in written reply to a question in the Lok Sabha.

Separation of Chairman and Managing Director roles: non executive chair sets policy while MD&CEO manages daily operations. Approval was given to separate Chairman and Managing Director posts in Public Sector Banks, creating a non executive Chairman responsible for overall policy direction and an executive MD&CEO responsible for day to day management, to introduce checks and balances and enhance board level accountability.