The Indian Banks’ Association (IBA) is expected to elect Challa Sreenivasulu Setty, the Chairman and Managing Director (CMD) of State Bank of India (SBI), as its new chairman, according to sources. The decision will be made during the long-delayed Annual General Meeting (AGM), which was supposed to happen in September 2024 but has now been scheduled for later this month.
Former PNB Chief A.K. Goel May Return as IBA CEO
At the same time, A.K. Goel, the former Managing Director and CEO of Punjab National Bank (PNB), is likely to return as the Chief Executive Officer (CEO) of IBA. Goel previously served as IBA chairman from November 2021 to March 2024. Sources indicate that he could take over the CEO position within a week.
Why Setty Could Become the Next IBA Chairman
Some IBA members are unhappy with how the association has been functioning in recent years. There is a feeling that the leadership has not been effective, leading to a trust deficit among member banks. Due to this situation, Setty is seen as a strong candidate for the chairman’s role, and he is reportedly open to the idea.
Even though SBI is the biggest contributor to IBA’s funding, its chairman has rarely held the top post in the past. Since IBA was formed in 1946, only about 4-5 SBI leaders have served as chairman. This is because, by convention, the most senior public sector bank (PSB) MD or CMD is chosen as IBA chairman. However, SBI operates under a different set of rules compared to other PSBs.
The SBI chairman’s retirement age is 63, while MDs of other public sector banks retire at 60. This means that SBI’s chairman usually has to wait longer before their turn comes. Based on the usual selection process, Rajneesh Karnatak, MD of Bank of India, is currently the most senior among PSB chiefs.
Right now, MV Rao (MD of Central Bank of India) is serving as IBA chairman, while Setty and City Union Bank’s Kamakodi are deputy chairmen.
Goel’s Appointment as CEO Faces Some Opposition
While Goel’s appointment as CEO has been approved by IBA’s Managing Committee (MC), led by current chairman MV Rao, some bankers, especially from private banks, were not fully in favor of it. However, his name has been finalized and will be formally announced once Finance Minister Nirmala Sitharaman gives her approval.
The CEO position has been vacant since September 2024 after Sunil Mehta, former PNB MD, completed his nearly five-year term.
The IBA CEO (a retired MD) handles daily operations, coordinates with the finance ministry, and represents the industry, while the IBA chairman (a serving CMD/MD) is the public face of the organization.
Controversy Over Leadership at IBA
During Mehta’s tenure as CEO, there were complaints that the chairman’s role was overshadowed. Some people even wanted to extend his tenure beyond 65 years, which is the maximum age limit under IBA rules. However, this idea was rejected after higher government authorities received complaints.
There was also controversy when IBA was not invited to the finance minister’s pre-budget consultation for the 2025-26 Budget. However, some private bankers did attend the meeting.
Who Are IBA’s Members?
IBA represents a wide range of banks, including:
- Public sector banks (PSBs)
- Private banks
- Foreign banks
- Payment and small finance banks
- Cooperative banks
The upcoming AGM will decide who will lead the IBA for the 2025-26 term.
