The ongoing Nirav Modi-Punjab National Bank (PNB) saga appears set to claim a new victim: According to media reports, the Banks Board Bureau (BBB) may not live to see its fourth birthday. Announced in February 2016 - on the recommendations of the RBI-appointed Nayak Committee set up to review the governance of boards of banks in India - its broad agenda was to improve governance at state-owned lenders. Its mandate also involved advising the government on top-level bank appointments and assisting banks with capital-raising plans as well as strategies to deal with bad loans.
But with stressed assets continuing to pile up and systemic risks getting unmasked by the massive PNB fraud, one can safely say that the BBB turned out to be little more than a paper tiger. The government apparently thinks so too. With the two-year term of its Chairman Vinod Rai coming to an end in March, the Business Standard reported that it is unlikely the government will look for a successor.
According to the daily, even its advice regarding appointments rarely helped much. For example, though the BBB chose Rajnish Kumar to take Arundhati Bhattacharya's seat as chairman of State Bank of India in July 2017, the decision was announced by the Appointments Committee of the Cabinet around three months later, just days before she retired.
Last year, BBB member and ICICI Bank's former Joint Managing Director H.N. Sinor had even put in his papers in a huff within days of sudden changes in the top management of PNB and Bank of India where the bureau had been completely bypassed, and this wasn't the first time. However, he was subsequently persuaded to return BBB's litany of woes doesn't end there. Last year it suggested empowering the Non-official directors (NODs) of PSBs to play the role of independent directors on the same lines as provided in the Companies Act, 2013 and setting up a Nomination and Remuneration Committee of the Board-currently performed by two separate committees-along the same lines. But the government is yet to respond.
Another of its stated functions was to "advise the Government on evolving suitable training and development programmes for management personnel" in public sector banks and financial institutions. But the likes of Bank of Baroda and PNB, among others, have reportedly reduced their in-service training for probationary officers from 24 months to about a year.
The writing on the wall becomes clearer when you factor in the following bit of news put up BBB's official website: Based on the mandate given by the Banks Board Bureau, the Indian Banks Association has issued the following two Request for Proposals (RFPs):
a. To appoint a Knowledge Partner to the Banks Board Bureau to design, implement and institutionalise a flagship leadership development strategy for Public Sector Banks in India.
b. To appoint an Advisory Firm to assist the Banks Board Bureau to assess the leadership competencies and potential capabilities of personages appearing in the process for appointment as wholetime Directors of Public Sector Banks in India."
Wasn't that the BBB's raison d'etre in the first place? Of course, there is a chance that the bankers' body has been asked pitch in to ease the workload for BBB members given the challenges being faced by PSBs and the imperative need to assess the leadership competencies and potential capabilities of applicants. As per the RFP, the advisory firm may have to engage with approximately 60 candidates/personages each year but will not be involved in shortlisting of the candidates. So there may be role for the BBB yet.
With PTI inputs
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