(Image source from: Vinod Rai becomes the first Chairman of the Banks Board Bureau})

Former CAG Vinod Rai was appointed as the first Chairman of the Banks Board Bureau, which will advise the government on top-level appointments at public sector lenders and ways to address the bad loans problem among other issues. ICICI Bank's former Joint Managing Director H N Sinor, Bank of Baroda's former CMD Anil K Khandelwal and rating agency CRISIL's former chief Rupa Kudwa have been appointed as members.With the constitution of the Bureau, the government intends to professionalise the selection for top posts at PSU banks. The idea is to improve the commercial performance and governance process of state-owned banks by appointing the right candidates to lead these institutions.

The Bureau, will in due course turn into a bank investment holding company, will also help banks to develop differentiated strategies and capital raising plans through innovative instruments. State-owned banks need Rs 1.8 lakh crore of capital by March 2019, out of which Rs 1.1 lakh crore will be raised from the market, while the government is committed to provide Rs 70,000 crore, as per the finance ministry’s estimates.

A committee headed by former chairman of Axis Bank P J Nayak, had in 2014 suggested the setting up of a bank board bureau, which can be later turned into a bank investment company. The Bureau will replace the Appointment Board, which selects top officials for public sector banks.

The Congress raised questions over the decision to appoint former CAG Rai, wondering whether the appointment was a “quid pro quo” and did not violate Article 148 (4) of the Constitution. Article 148 (4) says the CAG shall not be eligible for further office under the Government of India or of any state after he has ceased to hold his office.

Congress communication department head Randeep Surjewala tweeted: “PM confers Padma award, appoints ex CAG Vinod Rai as Chairman, Banks Bureau. Super Appointments Body for PSU banks. Does it not violate Art 148 (4) of the Constitution? Quid pro quo?”

By Premji