In Brief: PJ Nayak Committee and Banks Board Bureau (BBB)
Headline : BBB tags 75 officers for leadership roles in PSBs
- The Banks Board Bureau (BBB) has recently identified 75 senior officers for leadership roles in Public Sector Banks (PSBs).
- The BBB also gave its recommendations in key areas that needed to be strengthened besides improvising governance practices among PSBs.
About Banks Board Bureau (BBB)
- In 2016, the Banks Board Bureau (BBB) was constituted and started functioning as an recommendatory body.
- It is an autonomous body, constituted to:
- Improve the governance of Public Sector Banks
- Recommend selection of chiefs of government owned banks and financial institutions
- To help banks in developing appropriate strategies for their growth and development and capital raising plans
- It is a step towards governance reforms in Public Sector Banks (PSBs) as recommended by J. Nayak Committee.
- The BBB was also the part of Indradhanush Plan of the government.
PJ Nayak Committee
- The Nayak committee had recommended a three-phased reform in PSBs:
- Formation of a Banks Board Bureau (BBB)
- Holding company of PSBs
- Empowering and strengthening the boards
News Summary: BBB has give its recommendations in line with the recommendations of the PJ Nayak Committee. These are:
- Autonomy to banks to decide organisational structure: Respective bank boards be empowered to decide the organisation structure and deployment depending upon needs and strategy of each PSB.
- Rationalizing the composition and mandate of the board: The Bureau suggested rationalizing the number, composition and mandate of the committees of the Board across PSBs.
- Revamping Credit governance: BBB recommended appointing a Risk Management Committee (RMC) and revamping credit governance architecture in nationalised banks to reinforce efforts to minimise credit costs and enhance efficiency of credit allocation.
- Performance based compensation: Incentivise maximisation of risk-adjusted income and disincentivise operational inefficiencies by introduction of a performance-based compensation through Employee Stock Option Scheme.
Section : Economics