Banking Sector Reforms

Major reforms in Banks Board Bureau (BBB)


From UPSC perspective, the following things are important :

Prelims level: Banks Board Bureau (BBB)

Mains level: Not Much

The Union Finance Ministry is working to expand and relaunch the Banks Board Bureau (BBB) by bringing in more representatives from the insurance sector.

What is Banks Board Bureau (BBB)?

  • Banks Board Bureau (BBB) is an autonomous body to Promote excellence in Corporate Governance in Public Sector Financial Institutions.
  • The BBB works as step towards governance reforms in Public Sector Banks (PSBs) as recommended by J. Nayak Committee.
  • It was formed in 2016 to select executive directors, and managing directors and chief executives of state-run banks.
  • It is tasked to search and select personages for Board of Public Sector Banks, Public Sector Financial Institutions and Public Sector Insurance Companies and recommend measures to improve Corporate Governance in these Institutions.
  • It has been selecting directors and chairmen and managing directors of PSU general insurance companies since 2018.

Its establishment

  • The Central Government notified the amendment to the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1980.
  • It provided the legal framework for composition and functions of the Banks Board Bureau on March 23, 2016.
  • The Bureau accordingly started functioning from April 01, 2016 as an autonomous recommendatory body.

Functions of BBB

The mandate of the Bureau is to advise the Central Government on –

  • Selection and appointment of Board of Directors in Nationalised Banks, Financial Institutions and Public Sector Insurance Companies (Whole Time Directors and Chairman)
  • Matters relating to appointments, confirmation or extension of tenure and termination of services of the Directors of mandated institutions
  • Desired management structure of mandated institutions, at the level of Board of Directors and senior management
  • Suitable performance appraisal system for mandated institutions
  • Formulation and enforcement of a code of conduct and ethics for managerial personnel in mandated institutions
  • To build a data bank containing data relating to the performance of mandated institutions and its officers
  • Evolving suitable training and development programs for managerial personnel in mandated institutions
  • To help the banks in terms of developing business strategies and capital raising plan and the like;
  • Any other work assigned by the Government in consultation with RBI

Why such move?

  • The revamp is, in part, pushed by a Delhi High Court order last year.
  • It observed that the bureau was not a competent body to recommend appointments at PSU general insurers.
  • It held that circulars enabling BBB to select general managers and directors of PSU insurers were not legally valid.

Reasons behind the revamp

  • FM aims to legally empower the body to recommend candidates for public sector insurers, and accelerate top-level hiring at all state-run financial institutions.
  • The ministry plans to identify new members, restructure the bureau, and refer the new names to the appointments committee of the cabinet (ACC) in a couple of months.
  • The revamped BBB may also get a new name to indicate its remit over a wider set of financial institutions.


  • A revamp of the BBB will enable it to recommend full-time appointments at financial institutions where the current executives are given additional charge through interim arrangements.


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