The Prime Minister's Office (PMO) has rejected the proposal given by Finance Ministry on the selection of chiefs of banks. The Finance Ministry had proposed that bankers having less than two years of service left should be allowed to be appointed as chiefs of banks.

With this move by PMO, several candidates would be affected who are in the list of suitable candidates to lead banks.

Sources said that the PMO was not in favour of diluting out the appointment norms which have been existent since several years.

The objections from PMO have come when there were some enquiries by law makers to the Finance Minister, Pranab Mukherjee regarding the appointment of executive directors having less than 2 years of service left to be appointed as bank chiefs.

The PMO's intervention has broken the several year old tradition of selecting chairmen of public sector banks. Earlier the tradition was such that the chairman of a smaller bank usually took over the charge of a larger bank. The case is however different for Canara Bank where the Government has decided to promote an existing executive director because present chairmen of smaller banks do not meet the two criterions, that is, two years of residual service and one-year experience as chairman of a smaller bank.

Union Bank's S Raman is to take charge of Canara Bank when the present chief, A C Mahajan, retires in July. For six large banks, Punjab National, Bank of Baroda, Canara Bank, Bank of India, Union Bank of India and Central Bank of India, the system of lateral movement has been followed.

The government has asked for consent from 11 general managers for the position of executive directors in nine banks.