Banks board boss Vinod Rai puts Finance Ministry in the line of fire

In what may be its first public show of displeasure, the Vinod Rai-led Banks Board Bureau on Monday expressed its disappointment with the Finance Ministry.

Published: 20th March 2018 06:47 AM  |   Last Updated: 20th March 2018 10:25 AM   |  A+A-

Banks Board Bureau head Vinod Rai (File | PTI)

By Express News Service

MUMBAI / CHENNAI: In what may be its first public show of displeasure, the Vinod Rai-led Banks Board Bureau on Monday expressed its disappointment with the Finance Ministry. According to the Bureau, it made several suggestions to the government in its two years of existence to strengthen governance at public sector banks but there was no constructive feedback.

In a document released on Monday, the Bureau said it again wrote to the Finance Ministry on July 26, 2017 seeking directions on the various suggestions it had made in the past. However, there was no response to this either, it noted.

The original mandate of the Bureau, which came into being in April 2016, was to help the government pick top talent in PSBs. However, at its first meeting, the Bureau felt the extant terms of reference were nebulous. “The Bureau had a space to occupy and it had to itself define the space it would like to cover over a period of next two years,” it noted. So, it sent a revised terms of reference to the Department of Financial Services under the Finance Ministry in May 2016 for finalisation.

ALSO READ | Urjit Patel’s comments bring Finance Ministry-RBI tussle on the issue of wilful defaulters into open

It got a reply from the DFS in November 2016, but many of the mandates sought by the Bureau such as recommendations be placed directly before the Appointments Committee of the Cabinet; search and selection of non-official directors on PSB boards; and specific mandate on stressed asset resolution strategies, were not accepted. The ministry also rejected its suggestion of developing a roadmap for transferring government’s shareholding into a ‘bank holding company’.

The government, though, expanded BBB’s role to include helping banks in developing business strategies and capital raising plan, and leadership succession plan for critical positions.In its statement on Monday, the BBB decried the lack of “organic relationship” between the government and the Bureau. It also called for additional mandates for the Bureau such as power to engage with various stakeholders and advise the government to ensure that PSB consolidation is least disruptive; mandate to provide an independent feedback to the Finance Minister at least on a half-yearly basis on the degree of implementation of its various recommendations for PSBs. It also wants to engage with the boards of PSBs, the Department of Financial Services and the regulatory & supervisory functions of RBI. The development is curious as it comes at a time when the Bureau is reportedly set for closure after the term of Vinod Rai ends this month.

Rai speak

➊ The Bureau has made recommendations on various issues in its remit such as governance, reward and accountability framework in public sector banks. These seek to address the root cause of the challenges faced by PSBs. The Bureau is not aware of the progress made in this regard and there has been no further engagement with the government

➋ If the government does indeed desire to make the Bureau address issues of governance around PSBs in a holistic manner, there is need for an organic relationship between the government and the Bureau

➌ The Bureau would be able to provide greater utility to the Finance Minister on matters relating to the governance and performance of PSB. At present the body is merely functioning as an appointment board

Stay up to date on all the latest Nation news with The New Indian Express App. Download now
(Get the news that matters from New Indian Express on WhatsApp. Click this link and hit 'Click to Subscribe'. Follow the instructions after that.)


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp