This is a scathing piece by Tamal Bandopadhyay on Banks Board Bureau (BBB). For someone who has been reading banking history, it is not surprising to see government first creating hype by creating bodies like BBB which will “clean Indian banking forever” to be reduced to another of the several bodies. One problem in recent years how much hype media creates over anything connected to banking without either seeing basics or waiting for sometime to get details.
Over to Tamal for busting another such hype over BBB:
Clearly, the Bureau can recommend names, but when it comes to the postings of top executives, it doesn’t have the final say. Even its recommendations are not sacrosanct. Last year, the Bureau had identified Mukesh Kumar Jain, an executive director of Punjab and Sind Bank, to head IOB. It was cleared by the Vigilance Commission but Jain didn’t get the job as a finance ministry division was not comfortable with the choice. The appointment was referred to the department of personnel and training; once again, the Vigilance Commission cleared it after a forensic audit, but the ministry has not cleared it as yet. IOB, with one-third of its loan book being stressed, has been without a regular managing director and CEO for many months now. Its last MD and CEO R. Koteeswaran retired on June 30, 2016. IOB’s executive director R. Subramania Kumar has been holding the charge of MD and CEO since November.
Instead of taking the Bureau’s recommendations seriously and referring them to the appointments committee of the Cabinet for approval, they are all scrutinized de novo by the finance ministry.
Apart from the selection and appointment of board of directors in PSBs, the Bureau is also mandated to advise the government on extension of tenure and termination of services of the board of directors. However, when Sushil Muhnot, a former chairman and managing director of Bank of Maharashtra, was fired in September 2016—four days ahead of his scheduled retirement— for allegedly occupying two houses, the Bureau was not consulted.
Even these could be minor irritants. The bigger problem is it doesn’t have any say on the resolution of stressed assets, consolidation among the PSBs, their governance and charting out the roadmap for a banking investment company as was envisaged by the P.J. Nayak Committee. The report of the committee which reviewed the governance of boards of banks in India mooted the idea of the Bureau. The government has accepted that, but the big names are probably being used to lend credibility to a platform, which supposedly drives reforms in India’s public sector banking industry while in reality, they don’t have much on their plate.
What is the way out?
If the government has any reform agenda for the public sector banking system, laden with bad assets and starved of capital, talent and governance, the Bureau could be an ideal vehicle to drive it. If it doesn’t, the Bureau will become increasingly irrelevant. Anyway, none of the members seems to know how long their own tenure will be!
Another way of looking at it could be the members of the Bureau have taken themselves more seriously than they should have.
Phew! That is some statement, It is not just the Bureau but even media which makes looks at everything way too seriously…