Mr.Nikhil,
We as a CA firm presume that from the date of retirement , any employee of any banking institution seizes to have any interest or relationship with their erstwhile employers . Hence there is no question of ' potential conflict of interest ' which you are talking about.
Secondly , it is not irrelevant to mention here that probably you are highly less informed of the fact that even banks are very keen to insist on retired employees being one of the employees or partners of the firms of chartered accountants who render services to the banks like concurrent audits and statutory audits. Many banks insist in their application form that they prefer branch statutory and concurrent audits to be conducted by CA firms who employ retired bank officials . They also give such firms higher grading marks for allotment purposes . If your concept of ' conflict of interest ' is true , all these banks will not insist in such a manner.