Bank board bureau is an independent body of the government of India tasked to select the personnels for the banking sector and all other government financial institutions. The Board bureau also recommends measures to improve the corporate governance of the financial institution. Its mission is to promote excellence in corporate governance into public financial institutions. Banks board bureau includes their regulatory body in the activities of public sector banks. Government-authorized insurance companies, financial organizations and leadership development come under it. This study is going to discuss the concept, functioning and composition of the Banks board bureau.
Concept about Banks Board Bureau
Banks Board Bureau is an autonomous body of the Indian government for the appointment process of board members for different financial institutions of the public sector. This board also includes the activities of governance in these organizations. The central government of India has amended the process of bank nationalization in the year 1980 and they provide the legal function and composition in the hand of the Bank board bureau in the year 2016. They mandate advice to the central government on the matters of appointments, confirmation or extension on the tenures and the termination of the directors of the public sector banks. Bank board bureau builds a data bank with the data they contain relating to the performance of the nationalized banks directors. This process defines them as the authority of the Rights to Information Act, 2005 and controls the banking governance. The Banks board bureau was first recommended in the year 2014 by the “Committee to review the governance of boards of banks” directed by P.J. Nayak. Based on the recommendation of P.J. Nayak committee central government has constituted the Bank board bureau as part of the Indradhanush mission.
Functioning of Bank Board Bureau
Banks of the bureau are involved in different functions rather than appointing directors in the public sector banks.
- They have been assigned with the role of recommending the personalities for appointment as the directors of the insurance companies under the government of India.
- They also have been designed by boards of directors of the different public financial institutions to formulate proper functional strategies for the growth and development process.
- They are also involved in the improvement process of corporate governance on public sector banks and building capacities.
- They are responsible for suggesting a plan for merger and consolidation with other banks when banks are trapped in the issue of collective gross NPAs.
Composition of Bank Board Bureau
Banks board bureau is an entrusted authority for the selection of MDs and DMDs and proposed with 1 lakh crore financial development institutions for the acceleration of the financial infrastructure in India. Bhanu Pratap Sharma is the current chairman of the Banks board bureau. This autonomous body is based on the recommendation of “the RBI-appointed Nayak Committee”. It is also a part of the Indradhanush Plan where the appointment of whole-time directors and non-executive chairpersons is made. Bank board bureau is the part of the ministry of finance and takes the final decision on the appointments consulting with the office of Prime Minister. Banks board bureau comprises different members like chairman, secretary of the department of public enterprises, secretary of financial services and the deputy governor of Reserve bank of India. This board of bureau also consists of five expert members of the private sector.
From the above discussion, it can be stated that it is based on the concept of the autonomous body of the central government in the recruitment of directors and executives in the public banking sectors.. They also provide suggestions on the consolidation and merger of banking sectors in times of crisis. Their role in the public financial sector is to maintain an appropriate strategy for the growth and success of banks. They showcase the aspects of RBI in their recruitment process that have been handled by the chairperson of the committee. On the other hand, it also showcases the importance of the Banks board bureau in the process of termination of directors or the extension of the tenures.