Previous Year Question
With reference to the ‘Banks Board Bureau (BBB)’, which of the following statements are correct?
The Governor of RBI is the Chairman of BBB.
BBB recommends for the selection of heads for Public Sector Banks.
BBB helps the Public Sector Banks in developing strategies and capital raising plans.
Select the correct answer using the codes given below:
1 and 2 only
2 and 3 only
1 and 3 only
1, 2 and 3
Correct Answer: B
Detailed Solution
Statement 1 is incorrect.
The Banks Board Bureau was constituted by the Central Government in 2016 to assist in top-level appointments and governance reforms in public-sector banks and certain public-sector financial institutions.
The Governor of the RBI was not the Chairman of the BBB. The Chairman was selected by the Central Government. Its membership included ex-officio representatives such as the Secretaries of the Department of Financial Services and Department of Public Enterprises and a Deputy Governor of the RBI. Institutional representation of the RBI did not make the RBI Governor its Chairman.
Statement 2 is correct.
One of the principal functions of the BBB was to recommend suitable persons for senior positions such as whole-time directors and non-executive chairpersons of public-sector banks and financial institutions.
The BBB did not make the final appointment itself. It assessed candidates and submitted its recommendations to the Government, while the competent governmental authority made the final appointment.
Statement 3 is correct.
The BBB was not restricted to recommending appointments. Its governance-related mandate also included advising public-sector banks on:
business strategies and long-term development plans;
capital-raising plans;
organisational structure and human-resource management;
performance assessment of management; and
requirements relating to consolidation and mergers.
Therefore, Statements 2 and 3 are correct.
In 2022, the Central Government replaced the Banks Board Bureau with the Financial Services Institutions Bureau (FSIB). The answer is based on the original mandate of the BBB relevant to the question.