The government is planning to introduce a new entity in place of the Banks Board Bureau (BBB), with a wider and more legally tenable mandate, to recommend candidates for appointments to senior management-level posts in state-run banks, insurance companies and other financial institutions, sources told FE.
“The work is going on at a fast pace. But it’s taking a bit of time. The government is seized of the matter and a decision will be made soon,” an official source said. As FE had reported last month, the extended term of the BBB members ended on April 10 and the government was contemplating a revamped mechanism in its place.
Another source said the new entity will consist of some of the current BBB members as well, given their experience in handling such appointments. “Appointments to such posts that are lying vacant or going to be vacant will be cleared once the new entity comes into force. The government will continue to maintain an arm’s length distance on matters of such appointments,” he added.
The move followed a directive late last year by the Delhi High Court, which held that the BBB cannot select the general managers and directors of state-run general insurers, as it was not a competent body. Subsequently, at least half a dozen newly-appointed directors of non-life insurers had to vacate their positions.
This ruling came on a case filed by National Insurance Company general manager Ravi, who had complained that people junior to him were selected by the BBB for the position of directors in public-sector general insurers twice. The court also set aside relevant circulars that enabled the BBB to make such selections.
This prompted the government to replace the BBB, which was set up to recommend names of top executives of state-run banks and financial institutions, with a new entity that would not just do the same job but also have a wider mandate.
Before the BBB took over appointments relating to PSU insurance, the government used to notify them after shortlisting eligible candidates. One of the sources said work at general insurers hasn’t quite suffered, as there is not much difference between the functioning of the general manager (GM) and a GM who is a director.
As for the BBB, it’s now practically non-functional. In April 2020, the Appointments Committee of the Cabinet (ACC) had approved the extension of the term of the BBB’s part-time chairman BP Sharma and other members for a period of two years, which has now ended. Other part-time members were Vedika Bhandarkar, former managing director (MD) of Credit Suisse; Panja Pradeep Kumar, former MD of SBI; and Pradip P Shah, founder MD of rating agency Crisil.
Sharma had been heading the BBB since 2018 after the tenure of its first chairman and former controller and auditor general of India Vinod Rai got over.
The government set up the BBB in 2016 with an aim to “search and select apposite personages” for the boards of public-sector banks, financial institutions and insurance companies and “recommend measures to improve corporate governance in these institutions. It was also tasked with engaging with the directors of PSBs to prepare strategies for their growth and development.