Bank Board Bureau (BBB) For Public Sector Banks – Government and finance ministry another initiative to boost the profitability and capital need of Public Sector Banks (PSB) in India.
The main aim of setting up the Bank Board Bureau is to measure the performance of each bank on the basis of so called “key performance indicators” which would be designed and announced later by government. This will be like a banking investment holding company which will hold all the assets of the banks, the share holding assets of the government with the banks. The company would look after the matters of Appointments, Bank Board Bureau, Capitalization, De-stressing, Empowerment, Framework of Accountability and Governance Reforms.
The Measure work of Bank Board Bureau would be :
- The Banks Board Bureau will recommend appointment of directors in public sector banks (PSBs)
- BBB would advice bank on ways of raising funds and dealing with issues of stressed assets or NPA’s
- BBB would start functioning from next year i.e. 01-04-2016
- It will cease the power of RBI governor in appointing the CMD & CEO of Bank’s chief post , currently appointments for top level jobs at PSBs are made by an appointments committee led by the Reserve Bank of India (RBI) Governor.
- It will be six members body with at least 3 former bankers, 2 professionals and secretary, department of financial services representing government.
- Functions: Give recommendations for appointment of full-time Directors as well as non-Executive Chairman of PSBs.
- It will guide bank on merger and acquisition
NOTE : In my personal view I believe this as government move to seize the RBI power and interfering in banking affairs directly, this would make the political interference common as the appointment of directors and CEO’s will be purely in government hand after setting up the board.