Banks Board Bureau (BBB)

 Banks Board Bureau (BBB) is an autonomous body of the Government of India tasked to Search and Select apposite personages for Board of Public Sector Banks, Public Sector Financial Institutions and Public Sector Insurance Companies and recommend measures to improve Corporate Governance in these Institutions.

It was announced by Union Government in August 2015 as part of seven point Indradhanush Mission to revamp PSBs and started functioning in April 2016.

It had replaced Appointments Board of Government.

It is housed in Reserve Bank of India’s central office in Mumbai, Maharashtra.

BBB is considered as the first step towards Bank Investment Company as recommended by P J Nayak committee.

The first BBB was set up in February 2016 under chairmanship of former CAG Vinod Rai for two-year term that ended in March 2018. The Ministry of Finance takes the final decision on the appointments in consultation with the Prime Minister’s Office.

Central Government notified the amendment to the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1980 providing the legal framework for composition and functions of the Banks Board Bureau on March 23, 2016.

Composition of BBB

Banks Board Bureau comprises the Chairman, three ex-officio members (from government) i.e Secretary, Department of Public Enterprises, Secretary of the Department of Financial Services and Deputy Governor of the Reserve Bank of India, and five expert members, two of which are from the private sector.

Functions of BBB

Give recommendations for appointment of full-time Directors as well as non-Executive Chairman of PSBs.

To recommend the selection and appointment of Board of Directors in Nationalised Banks, Financial Institutions and Public Sector Insurance Companies (Whole Time Directors and Chairman)

To advise the Central Government on matters relating to appointments, confirmation or extension of tenure and termination of services of the Directors of mandated institutions

To advise the Central Government on the desired management structure of mandated institutions, at the level of Board of Directors and senior management

Give advice to PSBs in developing differentiated strategies for raising funds through innovative financial methods and instruments and to deal with issues of stressed assets.

Guide banks on mergers and consolidations and governance issues to address bad loans problem among other issues.

It engages with the board of directors of all the public sector banks to formulate appropriate strategies for their growth and development.

Any other work assigned by the Government in consultation with Reserve Bank of India.

To advise the Central Government on a suitable performance appraisal system for mandated institutions

To build a data bank containing data relating to the performance of mandated institutions and its officers;

To advise the Central Government on the formulation and enforcement of a code of conduct and ethics for managerial personnel in mandated institutions.

What are the reasons of its ineffectiveness?

In many instances, its recommendations are ignored by the government.

Rather than going to the cabinet for approval, its recommendations are re-scrutinised and sometimes overruled by the finance ministry.

Its incomplete control over the choice of members of bank boards is also clearly visible.

The Bureau when it was eventually formed did not have the power to oversee all senior appointments, including board-level choices.

It was reduced essentially to recommending names of the heads of PSBs and financial institutions.

Some new members of boards “non-official directors” are also members of the ruling, who act according to political desires.

The Power, to choose the heads of institutions such as IIFCL, IFCI, SIDBI and Exim Bank, was taken away from it and given to the finance ministry.