Former CAG Vinod Rai Led Banks Board Bureau to Shut Down

Its because of scarcity of board-level supervision that banks have failed to build a team of knowledgeable officers.

File photo of Vinod Rai, former CAG and the man who put the number to 2G spectrum scam.

(Photo: PTI)

The Banks Board Bureau (BBB), a makeover platform set up by the Modi government to improve the governance of state-run banks, is said to be shutting down in March. The closing down of the BBB comes at the same time when its chairman, Vinod Rai's term ends.

Since early 2000s, Punjab National Bank (PNB) and other state-owned banks like the Bank of Baroda have cut down their in-service training to half for probationary officers from 24 months to a year, the Business Standard reported. The PNB has not sent its treasury and forex personnel for refresher training for more than two years, which is not unusual, according to the business daily.

The BBB was set up in February 2016 by the Modi government and Rai was appointed as the first chairman. 

Apart from Rai, the BBB included the secretary, department of financial services in the finance ministry, a deputy governor of the Reserve Bank of India, as well as other top-rank bank officials. However, the BBB never got going except for choosing executive level people in banks, which itself was not very efficient.

The BBB apparently chose Rajnish Kumar as the chairman of the State Bank of India (SBI) in July 2017 whereas the announcement was made by the finance ministry in October 2017, just four days before the previous chairman resigned.

Similarly, the managing director of SBI was chosen by the BBB a few months back but the announcement has not been made yet, according to the Business Standard report. Apparently, the finance ministry has also refused to engage with the board.

The BBB had even suggested an eligibility criteria for the role of chartered accountant directors in public-sector banks, who are often selected due to their contacts in the parties in power.

It is because of scarcity of board-level supervision that these banks have failed to build a team of knowledgeable officers.

Even the data from PNB's annual report shows that the average time spent by its officers has been only six man-days in the past year. The bank has built an institute of information technology and has central and regional-level training centres.

An associate professor at the Indian Institute of Foreign Trade, Biswajit Nag estimated that it takes about 30 classroom hours for officers to become well-trained in handling documentation, logistics and aspects of foreign trade, according to the Business Standard report.

The BBB was also tasked with building a databank containing data relating to the performance of PSBs/FIs, its senior management and the board of directors, and share the same with the government.

They were also supposed to help the banks for critical positions that would come in the future as a result of appropriate HR processes, including performance management systems. However, none of them got going.

(With inputs from Business Standard.)