The All India Bank Employees’ Association (AIBEA) has urged the government to establish clear and comprehensive conduct regulations for managing directors (MDs) and executive directors (EDs) of public sector banks (PSBs), citing the absence of such rules as a barrier to transparency and accountability.
In a letter addressed to the Secretary of the Department of Financial Services (DFS), Ministry of Finance, AIBEA General Secretary C.H. Venkatachalam highlighted the need for well-defined disciplinary mechanisms to address allegations of misconduct among top bank officials, referencing recent media reports about alleged impropriety at Union Bank of India.
The AIBEA’s appeal comes in the wake of controversy surrounding Union Bank’s purchase of approximately 200,000 copies of India@100, a book authored by K.V. Subramanian, former Chief Economic Advisor to the Government of India and ex-Executive Director at the International Monetary Fund (IMF).
The transaction, reportedly costing ₹7.25 crore, has sparked widespread speculation about the conduct of Union Bank’s MD, whose term is nearing its end. Media reports suggest Subramanian, who was recently removed from his IMF post, may have pressured banks to purchase his book, though no official government statement has confirmed these claims.
AIBEA noted that a general manager at Union Bank has been suspended in connection with the deal, raising concerns that lower-ranking officials may bear disproportionate consequences in the absence of clear rules for senior executives.
“Public sector banks manage ₹130 lakh crore in public savings, and their integrity must be beyond reproach,” Venkatachalam wrote in the letter. “Without well-defined conduct regulations for MDs and EDs, allegations of corruption or misuse of authority remain speculative, damaging the banking system’s credibility. Transparent rules would ensure only the guilty are punished, protecting innocent executives from becoming scapegoats.”
The AIBEA emphasized that while bank employees and officers are governed by explicit disciplinary frameworks under Bipartite Settlements and Officers’ Conduct Regulations, MDs and EDs operate in a regulatory gray area, neither bound by these rules nor by those applicable to government officials. This gap, the association argues, allows unverified claims to proliferate in the media, fostering public distrust.
The Union Bank case exemplifies this issue, with no clear mechanism to investigate the MD’s actions, leaving the public and stakeholders reliant on incomplete information, the AIBEA said.
Venkatachalam also pointed to governance challenges within PSBs, noting that bank boards are currently “truncated” due to unfilled vacancies, including posts for public representatives, workman directors, and officer directors, some vacant for nearly a decade.
He questioned the appointment process for shareholder directors and referenced Subramanian’s role on the P.J. Nayak Committee, which advocated for good governance in banks. “One wonders whether pressuring banks to purchase such a large quantity of his book aligns with the governance standards he endorsed,” Venkatachalam remarked.
The AIBEA’s letter underscores the high-stakes environment in which PSB leaders operate, handling significant financial decisions that demand accountability.
The association argues that well-defined regulations would not only deter misconduct but also shield innocent officials from unfair scrutiny. The Union Bank controversy, has fueled calls for action, with the All India Union Bank Employees’ Federation (AIUBEF) demanding the MD’s resignation and an investigation into the procurement process.
Union Bank had admitted that there were some lapses in the process which it is probing currently.