UPSC Prelims 2019 Q73: Indian Economy – Banking & Financial Sector
- (a) Banks Board Bureau
- (b) Reserve Bank of India
- (c) Union Ministry of Finance
- (d) Management of concerned bank
Answer: (a) Banks Board Bureau
Explanation
Selection of PSB Chairmen
| Aspect | Detail |
|---|---|
| Selecting body | Banks Board Bureau (BBB) - set up 2016 by Government of India |
| BBB composition | Chairman + 6 members (nominated by Central Govt), advisory role |
| Successor | BBB was replaced by Financial Services Institutions Bureau (FSIB) in 2022 for PSB and insurance leadership selections |
| Prior arrangement | Before BBB, appointments were directly by ACC (Appointments Committee of Cabinet) with limited institutional buffer |
In 2019, the Banks Board Bureau was the body selecting PSB Chairmen. Answer: (a) Banks Board Bureau.
Answer: (a) Banks Board Bureau.
Why each option is right or wrong
- (a) CORRECT. (as of 2019). Banks Board Bureau (BBB), set up 2016, recommended PSB Chairmen and MDs. FSIB replaced BBB in 2022.
- (b) Incorrect. RBI is the banking regulator but does not select PSB Chairmen.
- (c) Incorrect. Ministry of Finance is the eventual appointing authority (via ACC), but not the selecting body.
- (d) Incorrect. Management of the bank does not select its own Chairman.
Key point
BBB (2016-2022) selected PSB Chairmen. Now replaced by FSIB (2022). Final appointment by ACC/govt.
Remember
The Chairmen of public sector banks (as of 2019) were selected by the Banks Board Bureau (BBB), set up in 2016. Final appointment is by the Appointments Committee of the Cabinet (ACC). BBB was replaced by the Financial Services Institutions Bureau (FSIB) in 2022.
Common mistakes
- Assuming RBI hires PSB Chairmen - RBI regulates but does not appoint.
- Confusing BBB (selection) with ACC (final appointment).
- Not knowing BBB was based on P.J. Nayak Committee (2014) recommendations for PSB governance reforms.
Exam tip
PSB governance reforms roadmap: P.J. Nayak Committee (2014) -> Indradhanush Framework (2015) -> BBB (2016) -> EASE (Enhanced Access and Service Excellence) reforms (2018) -> FSIB (2022). All aim at reducing government interference and improving performance.
Sources
- Ministry of Finance - Banks Board Bureau notification (2016)
- P.J. Nayak Committee Report (2014) on PSB governance