The common minimum programme has given managerial autonomy to public sector banks.

This is expected to translate into powers to the board of directors and the chairman and managing director to take decisions, with little directives coming from the banking regulator or the Union finance ministry, said most bankers.

With the government continuing to hold a majority stake in public sector banks, and the government nominating most of the directors on the board and clearing the appointments of the two top executive positions, the general consensus among bankers is that the board will continue to be beholden to politicians and bureaucrats.

So though in principle there is managerial autonomy, PSU bankers perceive that they will continue to be at a disadvantage vis a vis their private sector and foreign banking counterparts.

"We cannot operate on a level playing field as we live in fear of the Central Vigilance Commission," said a senior bank official. PSU banks -- like their private sector and foreign counterparts -- function on commercial lines and bank officials are responsible for ensuring the profitability of the operations.

"Ideally from the corporate governance point of view, the board should be the supreme authority steering the fate of the bank, without external forces impinging on its independent functioning," said a senior PSU banker. With government nominee directors on the board, there have been a number of instances of directed lending.

Further, the government has also ruled out paring its stake to less than 51 per cent -- a proposal that lapsed with the dissolution of the 13th Lok Sabha.

Interpreting the proposed managerial autonomy of PSU banks, senior officials expect that manpower augmentation can be undertaken without reference to the ministry.

"Even promotions to the top executive grade (from deputy general manager to general manager) could take place without ministry or RBI officials present at interviews," said the chairman and managing director of a leading PSU bank.

Autonomy in PSU banks is coming in fits and starts. Last year PSU banks were spared the bother of approaching the RBI and the ministry every time they want to raise subordinated debt. This helped them to time their Tier-II issues so as to take advantage of interest rate movements in the markets.