One year on, BBB looks less relevant
Banks Board Bureau (BBB), headed by former Comptroller and Auditor General Vinod Rai, began work in April 2016 with a lot of expectations that it would contribute to the turnaround of public sector banks. A year later, it looks less and less relevant, though its mandate only got expanded, beyond selecting people for top posts.
A surprise resignation by its member H N Sinor, former joint managing director of ICICI Bank, has brought the spotlight on the working of BBB.
Senior public sector bank (PSB) executives said while the board's ambit has expanded, it is difficult to understand specific contributions BBB has made. Of course, appointments of chief executive and full-time board members was a specific task.
While intention to contribute to betterment of PSBs has never been questioned, it did face hurdles in taking the agenda ahead due to differences on issues among different arms of the government, they said.
Vinod Rai's good equation with the prime minister and his office was expected to give an edge to the work on reforming PSBs, but nothing of the sort materialised. BBB is also expected to prepare ground for a banking company, which was to work as a holding company for government stake in PSBs.
Last week's government's drastic action to abruptly move chief executives of Punjab National Bank and Bank of India to smaller banks has cast a shadow on the role of BBB. It only reinforced the perception of BBB being a less powerful entity, said a top executive of PSB.
One human resources expert from a PSB associated with the board said BBB is a new organisation trying to find its feet. Activity was gradually gathering momentum for recommendation of people for top posts as well as working with PSBs to chalk out strategies, the expert said.
In its report on work from October 2016 to March 2017, BBB said it sent recommendations on the roles, responsibilities, remuneration, and service conditions of nonexecutive chairpersons as well as remuneration of non-executive directors in PSBs. This was done to ensure that a level playing field with private sector banks is established so as to attract good talent.
It also recommended a governance, reward, and accountability framework (GRAF) within PSBs. GRAF integrates elements of organisational structure and processes to ensure high standards of corporate governance.
It recommended a code of conduct and ethics, which could be enforced across all PSBs to ensure right behaviour and conduct.
It also put forward compensation reforms so that best practices can be introduced in PSBs on the lines already prevalent in central public sector enterprises.
As for the work in 2017-18, the BBB will be advising the government on evolving suitable training and development programmes for management personnel in PSBs. This is apart from fulfilling its mandate regarding appointments, later during the course of this financial year.
It will also help banks to develop a robust leadership succession plan for critical positions.