PNB also listed a CA or certified financial analyst (CFA) degree as ‘desirable educational qualifications’ for the role.

Punjab National Bank (PNB) on Monday announced an opening for a chief risk officer (CRO) with a professional certification in financial risk management. The hiring will be made on contractual basis.

The announcement comes days after State Bank of India’s (SBI) decision to laterally hire a chief financial officer (CFO) who would be a certified chartered accountant, in line with regulatory guidelines.

PNB also listed a CA or certified financial analyst (CFA) degree as ‘desirable educational qualifications’ for the role. At the same time, the position is open only to those who have had experience working at a state-owned bank. A mandatory requirement is “five years’ experience in corporate credit and risk management at the level of assistant general manager or above in one or more PSBs (public-sector banks) ‘or’ having similar roles and responsibilities in one or more regulated lending entity, with minimum experience of one year in corporate credit and one year in risk management.

Earlier, the Reserve Bank of India (RBI) has pushed for greater professionalisation of the role of the CRO at banks. In April 2017, it issued a circular stating that the CRO shall not have any reporting relationship with the business verticals of the bank and shall not be given any business targets. “As part of effective risk management, banks are required, inter-alia, to have a system of separation of credit risk management function from the credit sanction process,” the central bank said, going on to mandate a board-approved policy clearly defining the role and responsibilities of the CRO.

Sandeep Sarkar, partner, Deloitte India, said that the role of the CRO/CFO has undergone significant transformation, given the challenging times that banks find themselves operating in. “In an environment where historical and empirical data is rendered irrelevant from a risk modelling perspective and where maintaining liquidity is of paramount criticality, banks are hiring specialists from the market who can help navigate them through uncharted territory,” Sarkar said.

Sources aware of the matter told FE that apart from RBI, the government, too, has been nudging PSBs to bring in external personnel in specialist roles. “At least in the merged entities, there seems to be some push from the government as well. They are examining the gaps in key managerial personnel (KMPs) of these entities,” a source said. PNB was one of the anchor banks in the last round of mergers and effective April 1, Oriental Bank of Commerce (OBC) and United Bank of India stand merged with it.

However, there are challenges to this process as well, especially with respect to compensation structures and the alignment of work culture between a PSB and a hire coming from the market. Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services (APAS), said, “People in the private sector have a more conducive infrastructure, including a higher order of accountability with the support staff and colleagues in the other related departments. This can perhaps pose a challenge, in addition to the compensation and performance recognition mechanisms.”