HDFC Bank's preference for retired civil servants as non-executive chairpersons has faced significant challenges, as reported by Business Standard. The bank's former part-time chairman Atanu Chakraborty, a retired IAS officer who served as economic affairs secretary in the finance ministry, resigned in March citing differences of opinion with the bank's functioning. This prompted HDFC Bank to take three quick decisions: appointing veteran banker Keki Mistry as part-time chairman for three months, extending his tenure, and commissioning a legal review that found Chakraborty's allegations of unethical practices were 'not substantiated'. The bank then appointed Kumar for a three-year term, marking the third decision in quick succession.
According to Business Standard, two other top-five private lenders also have retired IAS officers as part-time non-executive chairmen. ICICI Bank has former Cabinet secretary Pradeep Kumar Sinha and Kotak Mahindra Bank has C S Rajan, former chief secretary to the Government of Rajasthan. Axis Bank has former RBI deputy governor N S Vishwanathan and Indusind Bank has former SBI managing director Arijit Basu as their chairmen. Last month, Debasish Panda, a retired IAS officer and former insurance regulator, was appointed part-time non-executive chairman of Bandhan Bank after serving as secretary in the Department of Financial Services and completing a three-year term as IRDAI chairman in 2025.
As reported by Business Standard, the RBI has been headed by retired civil servants for more than seven years since December 2018. IRDAI has been chaired by retired IAS officers for the past eight years, with the exception of a three-year gap from 2022 to 2025 when a private-sector professional headed it. SEBI too has been chaired by retired civil servants since 2005. This concentration of retired civil servants in regulatory positions has contributed to the absence of a level playing field for private financial sector professionals, according to the analysis.
According to Business Standard, retired civil servants bring valuable domain expertise and deep knowledge of government functioning that is particularly useful for companies operating in regulatory environments. Former finance secretary Ashok Jha joined Hyundai India as president after helping present the 2007-08 Budget, securing exemption from the cooling-off period required before joining the private sector. The analysis notes that financial-sector entities prefer retired civil servants because dealing with a regulatory system largely headed by retired IAS officers becomes relatively easier. However, it suggests that the government should re-examine opening regulatory jobs to private-sector candidates to restore a level playing field for professionals in the private financial sector.
