Finance minister Arun Jaitely launched a mission to improve functioning of public sector banks, named Mission Indradhanush on August 2015. The mission has seven pillars and the Bank Board Bureau (BBB) is one of those pillars. Bank Board Bureau is an autonomous recommendatory body which has limited but important roles to perform.
Bank Board Bureau was announced with mission Indradhanush on August 2015 but it became operational on April 1, 2016.
The recommendation of BBB was given by Nayak Committee, which was chaired by Dr P J Nayak who was the former chairman and CEO of Axis Bank. The committee was appointed by Reserve Bank of India to review the governance of board of bank of India and also to give suggestion to improve public sector Banks.
- Headquarters of Bank Board Bureau is at Mumbai. It is located in Reserve Bank of India, Central Office.
Reasons of the formations of BBB:
- Severe bad loan crises because of poor governance was faced by public sector bank of India.
- The need of reformation of Banking Sector in India.
Composition:
The Bank Board Bureau comprises 7 members including Chairman.
- Chairman
- Three ex-officio members: -1) Secretary of Department of Public Enterprises
2) Secretary of the Department of financial Services
3)Deputy Governor of the Reserve Bank of India
- Five experts, two of them must be from private sector.
- The members of Bank Board Bureau is appointed by Government of India.
- The first Chairman of Bank Bureau Board was Mr Vinod Rai (former CAG).
- The current Chairman of Bank Bureau Board is Mr Bhanu Pratap Sharma (Rtd. IAS).
Functions of Bank Bureau Board:
- To recommend the Appointments of Directors as well as non-executive chairpersons of public and state-owned financial institutions. (As it is a recommendatory body therefore Ministry of Finance takes the final decision on the appointments in consultation with the Prime Minister’s Office.)
- To give advice on ways of raising funds and dealing with issues of stressed assets.
- To examine how the functioning and governance of PSBs can be reformed.
- Its one purpose is to separate the day-to-day governance and supervision of the banks from the concerns of government.
- BBB is also the link between government and PSBs.
What are the reasons of its ineffectiveness?
- Recommendations can be ignored by the government because recommendations are not binding in nature.
- Sometimes before going to the cabinet for approval, its recommendations are re-scrutinised or overruled by the Finance Ministry.
- Recommendations are not binding hence incomplete control over the appointment of members of bank boards is clearly noticeable.
The Banks Board Bureau comes under public authority as defined in the Right to Information Act, 2005.
REFERENCE:
- Bankboardbureau.org.in
- Businesses Standards
- Wikipedia
-Bhadoriya Kiran