PSBs Current Affairs

Vinod Rai appointed as first Chairman of Banks Board Bureau

Former Comptroller and Auditor General (CAG) Vinod Rai has been appointed as the first Chairman of Banks Board Bureau (BBB).

His appointment comes after Prime Minister has approved the proposal of the Department of Financial Services for the constitution of the BBB.

Appointed Members of Banks Board Bureau are

  • Vinod Rai (Chairman): He is former CAG from January 2008 and May 2013.
  • N. Sinor (Member): He is former Joint Managing Director of ICICI Bank.
  • Anil K Khandelwal (Member): He is former CMD of Bank of Baroda’s
  • Rupa Kudwa (Members): She is former chief of CRISIL.

The tenure of Mr Rai and other members of the board will be of two years.

About Banks Board Bureau (BBB)

  • BBB will be a super authority (Autonomous Body) of eminent professionals and officials for public sector banks (PSBs). It will replace the Appointments Board of Government.
  • The bureau was announced by the Union Government in August 2015 as part of seven point Indradhanush Mission to revamp the PSBs.
  • Functions:Give recommendations for appointment of full-time Directors as well as non-Executive Chairman of PSBs.
  • 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 also ways to address the bad loans problem among other issues.

Currently, there are 22 state-owned banks or PSBs in India including State Bank of India (SBI), IDBI Bank and Bhartiya Mahila Bank etc.

Comment

Government wants BBB to restructure business strategy of PSBs and also suggest way forward for their consolidation and merger with other banks as they are grappling with a huge problem of bad loans and high collective gross NPAs (Non-Performing Assets).

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Government Issues Norms for Selection of CEOs and MDs of Smaller PSU Banks

After the irk raised due to appointment of two private sector bankers to head Bank of Baroda and Canara Bank the government has issued norms for selection of MDs and CEOs in Mid and Small Public Sector Banks (PSBs) on 20 August 2015.

The guideline was issued after the approval by the Appointments Committee of Cabinet (ACC) for selection of MDs & CEOs in Public Sector Banks (PSBs) other than five large Public Sector Banks.

As per the guidelines:

  • The top post in the PSBs would be filled from the existing pool of executive directors (EDs) or deputy managing directors (DMDs) in state-owned banks with a remaining service period of 2 years.
  • Henceforth the private sector executives would not be the part of the selection process of top management in the public sector banking space.
  • The DMDs of IDBI Bank, the EDs of nationalised banks and MDs of associate banks of SBI who have one year of service experience as ED/DMD/MD and who have two years of service left are entitled for post of MD & CEO.
  • Other than five large PSBs, for the remaining banks hiring will be conducted from the pool of executive directors of the public sector banks itself.
  • For the five large banks viz. Punjab National Bank, Bank of Baroda, Bank of India,Canara Bank and IDBI Bank there will be a separate procedure for selection

Selection Methodology:

  • The section will be done by the interaction of the candidates with three panels of the sub-committee of the Appointments Board, where the candidates will be rated out of 100 marks.
  • 50 marks to be awarded for Annual Performance Appraisal Reports (APARs) of five years and 50 marks assigned on the basis of performance during interaction with the sub-committee.

Eligibility criteria for executive directors of the nationalized banks:

For the post of executive director the General Managers of nationalized banks and CGMs of associate banks of SBI who have risen from the associate banks service who have two years of experience of service are eligible.

Note: There are total 27 PSBs in India – 19 Nationalised banks + 6 State bank group (SBI + 5 associates) + 1 IDBI bank (Other Public Sector-Indian Bank) = 26 PSBs + 1 Bhartiya Mahila Bank.

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