Wednesday, September 2, 2015

BANKS BOARD BUREAU: Another Initiative for PSB’s

A brief on Banks Board Bureau which is recently announced by our Finance Minister, for the PSBs. This can be asked in the General Awareness section. We hope that you will like this post.
Taking the first step towards a holding company structure for public sector banks (PSBs), the government announced the setting up of a Banks’ Board Bureau (BBB), where each bank would be monitored on the basis of  "key performance indicators".

The Banks Board Bureau will recommend appointment of directors in public sector banks (PSBs) and advice on ways of raising funds and dealing with issues of stressed assets.
The financial services secretary Hasmukh Adhia said that the political interference in the functioning of banks must cease. The BBB would replace the existing appointments board for PSBs. He also said that BBB will also be a link between the government and banks and will be engaged with banks to evolve strategies for them.
The bureau will be a six-member board comprising three from the private sector and three government nominees, while the chairman "will be a distinguished banker or regulator".

Banks have a requirement for Rs.180,000 crore over the next four years to meet their capital requirements. Of this, the government will provide Rs.70,000 crore. They have to raise Rs.1.1 lakh crore from the market. The BBB will advise the banks on ways of raising fund.  Also the government plans to provide Rs.25,000 crore capital each in the current and next fiscal year, while Rs.20,000 crore would be provided during 2017-18 and 2018-19.

Facts about Bank Board Bureau 
1) Bank Board Bureau (BBB) will start the functioning from next financial year i.e. from 1st April 2016 and the selection of its member will start in the next six months. 
2) It will replace existing system Appointments Board in which appointments for top level jobs at PSBs are made by an appointments committee led by the Reserve Bank of India (RBI) Governor. 
3) Composition: The BBB will be a body of ’eminent’ professionals and shall consist of only one government official. It will be six members body with at least 3 former bankers, 2 professionals and secretary, department of financial services representing government. 
4) Functions: Give recommendations for appointment of full-time Directors as well as non-Executive Chairman of PSBs. 
5) Give advice to PSBs in developing differentiated strategies for raising funds through innovative financial methods and instruments and to deal with issues of stressed assets. 
6) Guide banks on mergers and consolidations.


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