Industry
Bank of Baroda sees departure of two key CXOs it hired from the market
Summary
- Insiders said that there has been a subtle shift in stance on lateral hires during the tenure of the current chief executive Debadatta Chand who took over less than a year ago
Two top executives at Bank of Baroda, both lateral hires, have quit in quick succession and been replaced by internal officials, two people aware of the development said.
This shift towards promoting internal talent over reliance on external hires reflects a broader trend among public sector banks to address integration challenges and professionalize operations, even as the finance ministry has been encouraging them to recruit high-quality professionals from outside.
Bank of Baroda (BoB), India's second-largest state-run lender, announced the resignation of its chief risk officer S. Anantharaman in late April.
According to a person who spoke on condition of anonymity, Anantharaman, who had joined from HDFC Bank, was pulled up for issues related to the mobile app bob World, and his resignation came four months after the Reserve Bank of India (RBI) imposed restrictions on the bank.
Meanwhile, chief financial officer (CFO) Ian De Souza, who had joined from Yes Bank, has also quit, but his resignation is yet to be informed to the exchanges. De Souza is still serving his notice period, and the person cited earlier said the bank has appointed a deputy CFO in his place.
Focus on internal talent
Under chief executive officer (CEO) Debadatta Chand, who took over less than a year ago, BoB is now more keen on grooming internal candidates for top roles rather than relying solely on hiring them from outside at market salaries, the people cited above said.
“It is not that people hired laterally are being asked to go, but the bank is more focused on internal talent," said one of the people.
In October, RBI barred BoB from signing up new customers on its bob World mobile app due to certain “material supervisory concerns observed in the manner of onboarding customers onto this mobile application."
The ban was lifted on 8 May.
Read Here | App fiasco: Bank of Baroda tells branches to retrieve consent forms
“He (Anantharaman) was told that as the chief risk officer, he should have flagged this (bob World) issue internally but had failed to do so," the person cited above said. “He quit in February as he wanted to prioritize his health."
In fact, his resignation letter dated 1 February — a copy of which was shared by the bank on the stock exchanges on 29 April, also said, among other things, that the decision was “in the best interest of both" his “personal and professional well-being".
Anantharaman is expected to join a non-bank financier backed by a conglomerate.
Text messages sent to Anantharaman and De Souza seeking comments on the story remained unanswered.
“This is completely speculative. In any organization, the resignation and recruitment of people do take place in the normal course of business," a spokesperson for Bank of Baroda said in an emailed statement.
The bank’s management, the spokesperson said, “works in tandem with the strategic guidance received from the board and its policy continues to revolve around attracting and investing in home-grown talent, complemented by hiring from the industry in key positions/functions where required and in response to the rapidly evolving external environment".
Under former CEO Sanjiv Chadha, who came from the SBI Group, BoB had hired a clutch of senior executives from the market. As Mint reported in April 2023, these included the chief risk officer, the head of home loans, and the head of collections.
Read Here: Inside Bank of Baroda’s silent transformation
“At present, the management is more keen on internal talent. For lateral hires, the bank has fixed the number of years these employees can stay," said one of the people cited earlier. “They can now get up to a five-year role, including the initial three-year term and two extensions of one year each."
According to the second person, the idea is that the bank could hire from the market for verticals it is trying to build or roles where it does not have adequate internal talent, but once it gains some momentum, Bank of Baroda wants its employees to fill those positions.
“The term of three years was always there, but the tenure of the extension was not specified earlier. This, however, may not apply to all lateral hiring segments within the bank," said the other person who also spoke on condition of anonymity.
Evolving trends among public sector lenders
These exits come at a time when the Centre is nudging state-owned banks to be more professional in their functioning. Finance and corporate affairs minister Nirmala Sitharaman had said, at the Mint India Investment Summit, that public sector banks (PSBs) have requested the government to let them recruit from the market.
The government, she had said, wants high-quality professionals running the banks.
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Sector experts said that hiring external talent is a great initiative by public sector banks, although it is not without its own set of challenges.
Sunil Mehta, chairman of IndusInd Bank and former chairman of Punjab National Bank, said that it is not an easy task as lenders are inducting lateral executives with specialist competencies and differentiated compensation who have not been in the PSB system earlier.
The choices are made with the right intent to enhance the talent pool of the bank, he said.
“While it is not easy for them to settle down, from my experience, the senior leadership makes every effort to include lateral hires," said Mehta.
He added that for lateral hires to succeed, the top managements of banks need to empower them so that they are able to navigate complex and large institutions like public sector banks.
According to Mehta, given that this is such a complex issue, banks could look at board-approved policies on the induction and retention of lateral hires to ensure their success in the system.
Others said that some of these exits are also the result of a lot of opportunities available in the market at present, and that these lateral hires might be unable to adjust to the PSU (public sector undertaking) culture.
“There is a huge difference in culture. There are many more stakeholders in a PSU bank, more approvals are required and the time taken to get things done is longer," said Veinu Nehru, managing partner at executive search firm Fynehand Consultants. “The change in culture will not happen overnight and it is a journey which will take at least two-three years."
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According to Nehru, while the salary difference between an external and internal candidate in CXO roles can be at least three times, lateral hires also bring a lot to the table.
They are able to engage better with stakeholders, go on roadshows, are present on social media and can therefore increase the visibility of the bank, she said, adding that many PSUs are now looking at external executives who have some experience in the state-owned sector, so that the difference in culture does not come as a shock.
