The setting up of Banks Board Bureau (BBB) was announced by the union government in August 2015.
What is BBB?
BBB will recommend appointment of directors in Public Sector Banks (PSBs) and advice on ways of raising funds and dealing with issues of stressed assets.
Formation of BBB is the first step towards a holding company structure for state-run banks. By holding company, it is meant that the bank and its directors will be able to control other firms (called subsidiaries). The holding company, in turn, can borrow funds from the market to raise huge amounts of capital which can be infused into banks. It will enable banks to grow and lend more to revive the economy.
Some Facts about Banks Board Bureau:
- A search committee, which includes the Reserve Bank of India governor, will shortlist six candidates and a chairman for the part-time body which will take over the selection process for public sector banks and also discuss their business strategies
- Besides RBI governor, the search committee will include secretary, financial services and secretary, Department of Personnel and Training.
- The six-member panel will have three government officials and three experts, of which two will be from banking sector.
- The BBB would replace the existing appointments board for PSBs.
- The primary task of BBB will be to select top officials for PSBs
- Besides this task, the BBB will also be a link between the government and banks and will be engaged with banks to evolve strategies for them.
- The BBB will become operational on April 1, 2016.
The first chairman of Banks Board Bureau selected is Vinod Rai who is former CAG (Comptroller & Auditor General of India).