When the Government decided to raise retirement age limit of the Government officers from 58 to 60 this year, the maximum eligibility age for candidates for PSU heads and directors was not raised. It was decided to keep the maximum age limit of 56 for CMDs and directors, so that the minimum tenure would be increased to four years. The only exception of 58 years was made for candidates for the post of CMD who were directors in the same company. This meant that if a director of company wanted to apply for the post of CMD of the same company, he could be of 58 years, but an outsider would have to be 56 years at the most.

This decision was taken in July following an initiative taken by the Public Enterprises Selection Board. A notification was issued after intense discussions between PESB, Department of Personnel, Establishment Officer and the Department of Public Enterprises.

But following pressure from some quarters the Government is reversing this rule to make 58 the maximum age limit for all candidates. A cabinet note prepared by the Department of Public Enterprises has been sent to the Personnel Department. Some interviews of PSU heads and directors have already been held after the notification was issued. Sources say that the reversal of rule could lead to trouble for the Government if any one takes the matter to court for frequent changes in eligibility criteria.

This move flies in the face of Appointments Committee of Cabinet Guidelines which seek tenure of at least three-four years for top PSU executives. Under the current system, the delay in appointment takes away half the tenure of the CMD. For instance, if a CMD is selected when he is 58, it takes about an year for the administrative ministry and the Appointments Committee of Cabinet to clear the name. This period can go up if the candidate does not get vigilance clearance in time.

As a result the CMD would be 59 by the time he assumes office and would demit office in an year when he retires. Such a situation would create frequent changes at the top and also mean that the entire process of selection would have to be repeated within a short period.

But if the maximum age limit remains 56, then the CMD would have at least three years at the top before retiring at 60 even if the appointment process takes one year to complete.

The rationale behind giving two years advantage to internal candidates was that the incumbent director would already be well-versed with the company's operations and would not need any time to get cracking. An outsider though would need an year or so to settle down in the new position. And if he is 59 by the time he assumes office, his tenure would just be spent in settling down.