UPSC Prelims 2022 Q64: Indian Economy – Banking
With reference to the 'Banks Board Bureau (BBB)', which of the following statements are
correct?
1. The Governor of RBI is the Chairman of BBB.
2. BBB recommends for the selection of heads for Public Sector Banks.
3. BBB helps the Public Sector Banks in developing strategies and capital raising plans.
Select the correct answer using the code given below:
- (a) 1 and 2 only
- (b) 2 and 3 only
- (c) 1 and 3 only
- (d) 1, 2 and 3
Answer: (b) 2 and 3 only
Explanation
Banks Board Bureau (BBB)
Set up in 2016 on the P.J. Nayak Committee recommendation as an autonomous body.
| Statement | Verdict | Fact |
|---|---|---|
| 1. The RBI Governor chairs the BBB | Incorrect | The BBB had its own chairperson (first: Vinod Rai); the RBI Governor is not a member |
| 2. It recommends heads for public sector banks | Correct | It selected whole-time directors and non-executive chairs of PSBs and public financial institutions |
| 3. It helps PSBs with strategy and capital raising | Correct | Its mandate included advising PSBs on business strategy and capital-raising plans |
In 2022 the BBB was replaced by the Financial Services Institutions Bureau (FSIB).
Answer: (b) 2 and 3 only.
Why each option is right or wrong
- (a) Incorrect. The RBI Governor never chaired the BBB; it had its own chairperson.
- (b) CORRECT. The BBB recommended PSB heads and advised on strategy and capital raising.
- (c) Incorrect. It keeps the false RBI-chair claim and drops the BBB's key selection role.
- (d) Incorrect. Statement 1 is wrong; Vinod Rai was the first BBB chairperson.
Key point
BBB (2016, P.J. Nayak Committee): selected PSB heads and advised on strategy and capital; chaired by Vinod Rai, not the RBI Governor; replaced by FSIB in 2022.
Remember
BBB: picks PSB heads, advises strategy; not chaired by the RBI Governor.
Common mistakes
- Assuming the RBI Governor heads every banking body.
- Forgetting that the BBB came from the P.J. Nayak Committee (2014) on bank governance.
- Missing its 2022 replacement by the Financial Services Institutions Bureau.
Exam tip
Know the chairs of financial bodies: FSDC is chaired by the Finance Minister; the MPC by the RBI Governor; the BBB had an independent chair.
Sources
- Press Information Bureau — Constitution of Banks Board Bureau (2016)
- RBI — Report of the Committee to Review Governance of Boards of Banks (P.J. Nayak, 2014)