Revamping of Banks Board Bureau

In Context

• The Ministry of Finance is planning to bring more representatives from the insurance sector into the Banks Board Bureau (BBB), in a bid to expand and relaunch the body.

Objectives and need behind the move 

• The move to revamp BBB comes after a Delhi High Court bench in 2021 pushed the same, saying that the body was not competent enough to recommend appointments to select general managers and directors at PSU general insurers.
• There is also a case pending in the Delhi HC, where a PSU insurer executive has challenged the appointment of the chairman and managing director of United India Insurance selected by BBB. 
  • Amid these issues, appointments by the BBB have been suspended.
  • The BBB is now practically non-functional .
• Therefore ,the government is looking to expand the body and  to rename it and give it a fresh mandate for appointments.
• The move aims to empower the body to recommend people for public sector insurers and fasten hiring at the top level of state-owned financial institutions.

Major changes 

• The union finance ministry is planning to identify new members, restructure the bureau, and recommend new names to the Appointments Committee of the Cabinet (ACC).
• The restructured BBB, which will have a remit over a wider set of financial institutions, may also get a new name
• After revamp, the board will be able to recommend full-time appointments at financial institutions, where currently the executives are given additional roles through interim arrangements.

About Banks Board Bureau 

• It is an Autonomous Body of Government of India. 
• It was set up in 2016 by the government with the aim to select executive directors and managing directors and chief executives of PSBs and financial institutions. 
  • The board has been recommending appointments for directors, chairpersons, and MDs for PSU general insurers firms since 2018.
• It is  committed to improving the Governance and Boards of public sector financial institutions. 
  • The Secretariat of the Bureau currently comprises Secretary and four officers.

Vision 

• 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.

Mission 

• To Promote excellence in Corporate Governance in Public Sector Financial Institutions

Functions 

• To recommend the selection and appointment of Board of Directors in Mandated Institutions (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;
• 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.
• To advise the Central Government on evolving suitable training and development programs for managerial personnel in mandated institutions.
• To help the banks in terms of developing business strategies and capital raising plan and the like;
• Any other work assigned by the Government in consultation with the Reserve Bank of India.

Source:BS