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Annual Report – 2019-20

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BanksBoardBureauB

BanksBoardBureau B


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Chapter Description Pages I. THE BOARD 3

II. PRINCIPAL OFFICERS OF SECRETARIAT 4III. OVERVIEW 5IV. ESTABLISHMENT AND FUNCTIONS 9V. RECOMMENDATIONS FOR APPOINTMENT 11

VI. EVENTS AND VISITS 13 VII. LEADERSHIP DEVELOPMENT PROGRAMME 18VIII. RECOMMENDATIONS ON GOVERNANCE 22IX. RIGHT TO INFORMATION ACT, 2005 26X. DATABASE, ANALYTICS AND IT SYSTEMS 27

XI. RECEIPTS AND PAYMENTS ACCOUNT 29

Contents

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ACC Appointments Committee of the CabinetCEO ChiefExecutiveOfficerCGM ChiefGeneralManagerCMD ChairmanandManagingDirectorDFS DepartmentofFinancialServicesDMD DeputyManagingDirectorFI See PSFI GM GeneralManagerIBA IndianBanksAssociationIIFCL IndianInfrastructureFinanceCompanyLimitedIIM IndianInstituteofManagementIRDAI InsuranceRegulatoryandDevelopmentAuthorityofIndiaLDP LeadershipDevelopmentProgramMD ManagingDirectorMD&CEO ManagingDirectorandChiefExecutiveOfficerMOF MinistryofFinance,GovtofIndiaNABARD NationalBankforAgricultureandRuralDevelopmentNEC Non-ExecutiveChairmanNOD Non-officialDirectorNRC Nomination&RemunerationCommitteePSIC PublicSectorInsuranceCompaniesPSB PublicSectorBankPSFI PublicSectorFinancialInstitutionsRMCB RiskManagementCommitteeofBoardSBI StateBankofIndiaSEBI SecuritiesandExchangeBoardofIndiaSIDBI SmallindustrialDevelopmentBankofIndiaWTD WholeTimeDirectors

LIST OF ABBREVIATIONS


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I. THE BOARD

Public Sector Banks & Financial Institutions

Debasish Panda*Secretary

DepartmentofFinancialServicesEx-Officio Member

Sailesh@Secretary

DepartmentofPublicEnterprisesEx-Officio Member

M. Rajeshwar Rao#DeputyGovernor

ReserveBankofIndiaEx-Officio Member

Vedika BhandarkarFormerViceChairman&MD

CreditSuisseExpert Member

Pradeep Kumar PanjaFormerMD

StateBankofIndiaExpert Member

Pradip Panalal ShahFounderMD

CRISILExpert Member

Public Sector Insurance Companies

Debasish Panda*Secretary

DepartmentofFinancialServicesEx-Officio Member

Dr. S C KhuntiaChairman

IRDAIEx-Officio Member

Sailesh@Secretary

DepartmentofPublicEnterprisesEx-Officio Member

Ghyanendra Nath BajpaiFormerChairman

SEBIandLICofIndiaExpert Member

Mathew VergheseFormerGeneralManager

NewIndiaAssuranceCompanyLtd. Expert Member

N M Govardhan&FormerChairman

LICofIndiaExpert Member

*ShriRajeevKumarwastheEx-officiomemberuptoFebruary29,[email protected],2019.#ShriNSVishwanathanwasamembertillMarch31,2020.ShriMKJainwasmembertillNov11,2020.&ShriNMGovardhanisappointedasExpertmemberonAugust3,2020.

Bhanu Pratap SharmaChairman

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II. PRINCIPAL OFFICERS OF SECRETARIAT

SecretaryDr.VijaySinghShekhawat,GeneralManager(August9,2019onwards)NavinNambiar,GeneralManager(tillAugust8,2019)

Assistant General ManagersKshitijSinghRishabhGarg

ManagerSavitriRamesh(tillMay29,2020)

Assistant ManagerDevanshRawat(January08,2020onwards)

All the staff in Secretariat are from the Reserve Bank of India


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TheBureau isanautonomousbodyof theGovernmentofIndiasetupin2016forde-veloping and implementing appropriatemethodologiesforappointments,extension,andterminationofmembersoftheBoardinpublicsectorbanks,publicsectorinsurancecompanies, and financial institutions. TheBureau ismandated to improve theman-agementstructures,performanceappraisalsystemsand formulation and enforcementof a codeof conduct andethics formana-gerialpersonnelinpublicsectorbanks.ThemandateoftheBureauhasbeenexpandedinNovember 2019 to include the appoint-ments of Whole time Directors of PublicSectorInsuranceCompanies(PSICs1).

During theyear2019-20, theBureaumaderecommendations for 34 appointments ofWholeTimeDirectorsinthemandatedin-stitutions.Theaveragetimeformakingtherecommendationwas 45 days2. Of the 34, recommendations, 31 (91%) were appoint-ed by Government in the recommendedpositions. Inallcaseswhereappointmentsrequired interactions with candidates, theresultsof the interactionwasuploadedontheBureau’swebsitewithinhoursoffinal-

isation.TheresultswerealsopublishedontheOfficialTwitterhandlewithinminutesof finalisation, making the whole processtransparent. The average time for recom-mending,whenthevacancywastobefilledinbyinternalcandidates,was32dayswhilevacancies filled through open advertise-mentswerecompletedin53days.Thereaf-ter, various clearances were obtained andapprovals taken from competent author-ities. This process took around 3 months.TheBureauinteractedwith126candidatesmaintaininganaverageratiooffivecandi-datespervacancy.

Intheyear,Bureaucommencedwithcom-petency assessment of all candidates ap-pearingforanyoftheBoardlevelpositionsin PSICs, Public Sector Banks (PSBs), andPublicFinancialInstitutions(PSFIs).Theseassessments were earlier being done onlyfor MD & CEOs of large PSBs. Also, theBureaustartedcarryingoutabackgroundcheck on all private candidates appearingforanypositioninPSBsandPSFIs.Despitethese additional checks, the Bureau hasmanagedtoreducetheaveragetimetakenforrecommendationsfrom71daysin2018-19 to45days in2019-20.This reduction in

III. OVERVIEW

1. LifeInsuranceCorporationofIndia,GeneralInsuranceCorporationofIndia,TheNewIndiaAssuranceCompanyLtd.,TheUnitedIndiaInsuranceCompanyLtd,TheOrientalInsuranceCompanyLtd.,NationalInsuranceCom-panyLtdandAgricultureInsuranceCompanyofIndiaLtd.

2. Differencebetweenthedateofnotificationofvacancyanddateofrecommendation

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time taken for the recommendation wasduetoimprovementinprocessesforscruti-nyandleveragingontechnology.Moreover,allvacanciesforEDswerefilledupbylater-alshiftingofEDsfrommergingbanksandhencedidnotrequiretheusualprocesstobeundertaken.

TheaveragetimetakenforrecommendingMD&CEO/MD/CMD/Chairmanwasreducedfrom89daysto32daysonaveragein2019andforEDandequivalentpositions,itwasreducedfrom60daysto55days.

Whilethefocusremainedonappointmentsduring the year, the Bureau also followedup and finetuned its recommendationsmade to theGovernment, especially thoserelatedtoGovernance.Afewof theserec-ommendationswereacceptedandnotifiedby the Government during the year as apartofgovernancereformsinpublicsectorbanks.

A Leadership Development Program wascurated and launched by the Bureau in2019-20 to create a pipeline of leaders inPSBs. The program aims to enhance tech-nicalskills,increasemarketawareness,andleadership qualities by using on-campus,online,andoff-campusinterfaces.ThePro-gramwasdesignedbyM/SEgonZehnderanddeliveredbyIIMBangaloreanditsas-sociates.The first batchofLeadershipDe-velopmentProgramcomprising75DeputyGeneralManagers /GeneralManagers ofPublicSectorBanks(PSBs)completedtheirprograminJuly2020.

AsanaddendumtotheProgram,aDiscov-eryDayEventwasdesignedanddeliveredbyM/SKPMG and IIMBangalorewith afocuson theopportunities andchallengesthatarosefromthemergerofvariousbanksin2019-20.AsapartoftheDiscoveryDay,the officers of the PSBs participated in asurveytodiscernthedifferencesinOrgan-

0 5 10 15 20Union Bank of India

UCO Bank

Punjab National Bank

Punjab and Sindh Bank

Indian Overseas Bank

Indian Bank

Central Bank of India

Canara Bank

Bank of Maharashtra

Bank of India

Bank of Baroda

NumberofParticipantsofLDP


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isationalCulture.Thefindingsindicatethatthe organisational culture across the sur-veyedPSBs issimilaroverallwithaslightdiversity in someof thecultural traitsbuteventhatdiversitytendstoconvergeatse-niormanagementlevels.Around25,000of-ficersfromvariousPSBsparticipatedinthissurveywithrepresentationatalllevelsandregions.

TheLiveProjects,amandatorypartofthe

LDP,comprised18projectsfocusedonde-liveringspecificresultsforthePSBs.MD&CEOsofPSBshavebeenveryappreciativeof theLiveprojects thathadan impactonthereductionofnon-performingassets,re-ductionof costs, and improvement ineffi-ciencythroughtheintroductionofnewpro-cesses,estimatedatatotalofRs.4,265crore.Thesecondbatchof66officerscommencedtheirprograminSeptember2020.ThisbatchincludesofficersfromEXIMBankaswell.

0 1000 2000 3000 4000 5000 6000

Andhra Bank (Erstwhile)

Canara Bank

Corporation Bank (Ertstwhile)

Indian Bank

Oritental Bank of Commerce (Erstwhile)


Syndicate Bank (Erstwhile)

Union Bank of India

United Bank of India (Erstwhile)

OrganisationalCulturesurveyresponses

0 5 10 15 20EXIM Bank

Union Bank of IndiaUCO Bank

Punjab National BankPunjab & Sind Bank

Indian Overseas BankIndian Bank

Central Bank Of IndiaCanara Bank

Bank of MaharashtraBank of India

Bank of Baroda

DGM

CGM

CandidatesforBatch2ofLDP

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Ontheadministrativeside,inthewakeofthe global pandemic, the Bureau acquiredVideoConferencingSystemandE-Signingcapabilities,anddevelopedlegaldocumen-tation andMeeting protocols for the con-tinuationof the interactions andmeetingsremotely.Ithasalsodevelopedsystemsandprocessesforgatheringonlineapplicationsfrom candidates applying for various va-cancies.

The Bureau also prepared its first ReceiptandPaymentAccountfor2019-20afterdulyreconciling all previous receipts and pay-ments. The expenses for 2019-20 and thedemandsfor2020-21wereintimatedtoSBI,IRDAI, and NABARD as per the revisedprocess.TheBureaualsoundertookamajorrenovationofitspremisestocreatesuitableinfrastructure for the conduct of interac-tions including acquiring state-of-the-artvideoconferencingsystem.


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Establishment and Mandate

Central Government notified the amend-ment to the Nationalised Banks (Man-agement and Miscellaneous Provisions)Scheme, 1980 providing the legal frame-work for constitution and functioning oftheBanksBoardBureauonMarch23,2016.The Bureau accordingly started function-ing fromApril 01, 2016as anautonomousrecommendatory body of Government ofIndia.

The functions of the Bureau, outlined inSection 7(C) of the Scheme and in subse-quent amendments as per orders of Ap-pointmentsCommitteeoftheCabinet,are:

a) To recommend the selection and ap-pointmentofBoardofDirectorsinPub-lic Sector Banks, Financial Institutions3 andPublicSectorInsuranceCompanies4 (WholeTimeDirectors andNon-Execu-tiveChairman).

b)To advise the Central Government onmatters relating to appointments, con-firmationorextensionoftenureandter-minationof services of theDirectors of

nationalisedbanks.c) ToadvisetheCentralGovernmentonthedesiredmanagementstructureofnation-alisedbanks,atthelevelofBoardofDi-rectorsandseniormanagement.

d)Toadvise theCentralGovernmentonasuitable performance appraisal systemfornationalisedbanks.

e) Tobuildadatabankcontainingdatare-latingtotheperformanceofnationalisedbanksanditsofficers.

f) ToadvisetheCentralGovernmentontheformulationandenforcementofacodeofconduct and ethics formanagerial per-sonnelinnationalisedbanks.

g)To advise the Central Government onevolving suitable training and develop-mentprogramsformanagerialpersonnelinnationalisedbanks.

h)Tohelpthebanksintermsofdevelopingbusiness strategies and capital raisingplanand the like; andanyotherworksassignedbyCentralGovernment.

FunctionsAsaresultoftheinitialmandateandsubse-quentamendments,theBureauisresponsi-bleforappointmentofdirectorsof:a)PSBs:FiftypositionsofWholeTimeDirec-tors–ElevenMD&CEOsandThirty-fourExecutiveDirectorsofNationalisedBanks;

IV. ESTABLISHMENT AND FUNCTIONS

3. Asperorderdated24-Aug-20154. Asperorderdated6-Nov-2019and9-Jun-2020

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one Chairman and fourManaging Direc-torsofStateBankofIndia;andElevenpo-sitionsofNon-ExecutiveChairman(NEC).b)PSICs:Elevenpositions5–OneChairmanand fourManagingDirectors of LIC, andsixCMDsofPSICsotherthanLIC;andc)PSFIs:Fourteenpositions–SixpositionsofCMDs/MDs/MD&CEOsandEightpo-sitions of the DMDs. CompositionThecompositionofBoardoftheBureauforPSICshasbeenalteredtoincludethreeex-pert members from Insurance Sector andthe Chairman, Insurance Regulatory andDevelopmentAuthority of India asEx-Of-ficiomember. The composition of the Bu-reau for search and selection for financialinstitutions (EXIMBank,SIDBI,NABARD,IIFCL,IFCILtd,NHB)alsohasbeenalteredtoincludeoneexpertwithwideexperiencein financial sector in lieuof theex-bankermember.Subsequently,theex-bankermem-ber has been retained for the purpose ofmattersrelatedtoFIsaswell.

ManagementThe general superintendence, directionandmanagementofaffairsoftheBureauisvestedintheSecretary,whoshallfunctionunder the guidance and direction of theChairmanandmembersoftheBureau.TheBureauhasanofficeinMumbaiwithade-quatestaff.

TheBureau is anot-for-profit autonomousbodythatwasinitiallyexpectedtomeetitsexpenses with upfront support from Re-serveBankofIndiaandthereafterdistributetheexpensesamongthePSBs.Therevisedguidelinesfortheyear2019-20(andthereaf-ter)specifythattheexpensesoftheBureaushall bemetbyallPSBs,PSICsandPSFIsonapro-ratabasisbasedonthenumberofvacanciesofWholeTimeDirectors(WTDs)estimated as on 1st April of the vacancyyear in each category i.e. PSBs, PSICs andPSFIs.Thereafter,thesameshallbedistrib-utedamongst theoperatingprofitmakingPSBs/PSICs/PSFIsonthebasisof theratioofprofitoftheindividualPSB/PSIC/PSFItothetotalprofitofallthePSBs/PSICs/PSFIs.

5. 9 posts of ‘GM & Directors’ on respective boards were proposed to be filled up in 5 Public Sector General Insurance compa-nies viz. NIACL, NICl, OICL, UIICL and GIC, with their General Managers in the Zone of Consideration. Guidelines for the same have now been approved by the Appointment Committee of the Cabinet. Hereafter, these posts would also be filled up through the Bureau.


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Intheyear2019-20,theBureauhandled34vacanciesforthefollowinginstitutioncate-gories:

Theprocessstartswithcollectionandscru-tiny of applications sourced directly frominstitutions or from open advertisement.Ofthetotalapplicants,88candidatesweresubjected to behavioral assessment by ex-ternal agencies. Also, 19 non-government/non-PSU candidates were subjected tobackgroundchecksbyexternalagencies.Oftheeligiblecandidates,131appearedforin-teractionswith theBureaumembers.Eachcandidate was invariably interviewed bythree panels, each comprising one ex-offi-cioandoneexpertmember,oftheBureau.Afterinteractionswithcandidates,thefinalrecommendation of the Bureau uploadedonthewebsitewithinhoursoffinalisation.ThesamewasalsopublishedontheOfficial

Twitter handlewithinminutes of finalisa-tion.

The entire processwas carried out by theSecretariatexclusivelyandonanaverage,ittook45daysfromthedateofnotificationtothedateofsubmissionoftherecommenda-tions. Thereductionintimehasbeenduetotheimprovementinsystemandprocess-esincludingacquiringVideoConferencingsystem for online interactions.Mergers ofPSBsin2019-20thatallowedtheEDvacan-cies tobe filled inby lateralmovementofEDsfrommergingentitiesalsocontributedtoreductionoftimetakenforrecommenda-tion.

Specifically,inthecaseofPSBs,theBureauhashandledmorethan300applicationsforfillinginmorethan90vacanciesforvariousboard levelpositions since its inception in2016.Startingfrom2019-20,thebehavioralassessmentshasbeenadoptedasastandardprocess forallcandidatesandbackgroundcheck is done for all private candidates.Detailsofvacancies,applicantsandrecom-mendations since the inception of the Bu-reauaregivenintheTable2.

V. RECOMMENDATIONS FOR APPOINTMENT

Designation FIs PSBs PSICs Total

Chairman 1 - - 1

CMD - - 2 2

DMD 7 - - 7

MD 1 1 2 4

MD & CEO 5 - 5

EDs - 4 - 15

GrandTotal 9 10 4 34

Table 1:Recommendationsin2019-20

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Position Period Vacancy Appli-cants

Shortlist-ed

Be-havioural

Assess-ment

Back-ground verifica-

tion

Candi-dates

recom-mended

ExecutiveDirectorinNationalisedBanks 2016-17 18 45 45 NA NA 18




ManagingDirectorinSBI 2016-17 1 3 3 NA NA 1




MD&CEOinNationalisedBanks 2016-17 3 10 10 NA NA 3



MD&CEOinNationalisedBanks 2019-20 4 62 25 29 9 4

Chairman,SBI 2017-18 1 4 4 NA NA 1

Chairman/MDinFIs 2019-20 2 37 24 10 1 2

DMD in FIs 2019-20 7 116 40 25 0 2

ChairmanLIC 2018-19 1 5 5 0 0 1

CMD in PSICs 2019-20 2 7 7 0 0 2

MD in LIC 2018-19 2 9 9 0 0 2

MD in LIC 2019-20 2 7 7 0 0 2

NECinNationalisedBanks 2016-17 10 # NA NA 3




#AsperthelistofIndependentDirectorssourcedfromvariousdatabasesonboardsoflistedcompanies

inIndia

Table 2: RecommendationsforthepostsofNECsandWTDsinPSBs/PSICs/FIs


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April 8, 2017: The BureauinauguratedbythenMinis-terofStateforFinance,ShriJayantSinha.Alsovisibleinthe photograph areDr. Ra-ghuramRajan,formerGov-ernor, RBI, Shri Vinod Rai,former Chairman, BanksBoard Bureau, Shri Ameis-ing Luikham, former Sec-retary, Department of Pub-lic Enterprises,GOI, ShriRGandhi and Shri Mundra,former Deputy Governors,Reserve Bank of India, Dr.Anil K. Khandelwal, ShriH.N. Sinor, andMs. RoopaKudva, former members,BanksBoardBureau.

VI. EVENTS AND VISITS

March 26, 2018: The termoftheFirstBoardoftheBu-reau gets over. From Rightto left, Shri Rajeev Kumar,then Finance Scretary andEx-OfficememberoftheBu-reauisseenhandingoveramementotoShriVinodRai,Chairman,ShriH.N.SinorandDr.AnilK.Khandelwal.

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April 24, 2018: The mem-bers of the Second Boardmeet for first time. Visiblein the photograph are ShriBPSharma,ChairmanandBoard members Shri N. SVishwanathan, Ms Vedi-ka Bhandarkar, Shri PanjaPradeep Kumar and ShriPradipPShah.

July 19, 2019: TheLeadershipDevelopmentProgramisinauguratedatIIMBangalore.


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August 8, 2019:ShriShaktikantaDas,

Governor,ReserveBankofIndiameetstheBureau

Leadership Development Program – July 2019 to July 2020

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Leadership Development Program – July 2019 to July 2020


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Leadership Development Program OutboundWildernessModuletoamalgamatethetheoriesofleadershipandteamwork

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OneofthemandatesoftheBanksBoardBu-reauis‘To help banks to develop a robust lead-ership succession plan for critical positions that would arise in future through appropriate HR processes, including performance management systems”. Inaccordancewiththismandate,in consultationwith the IBA, theBureau’sKnowledgePartnerM/SEgonZehnder,theleadershipof thePSBsand IIMBangalore,theBureaucuratedaLeadershipDevelop-mentProgramme(LDP)thatwasdeliveredbyIIMBangalore.

Program Details:TheprogramwasdeliveredbyIIMBanga-lore and their partners. The program hadmodules for all-rounddevelopment of theparticipants.Personal Growth Journeymod-ule focused on Individual growth by ex-

ploring identity and potential, developingstrongerconversationalskills,internalskillsfor influencing and leadership presence,leading teamsanddrivingOrganizationalLearningetc.Functional modulesfocusedonmost recent advances in exponential tech-nologies and the latest leadership and or-ganizationalmodelstosupportinnovationwithhands-onexperience.Coaching module wasbasedonIndividualDevelopmentPlan(IDP)thatwasdrawnupforeachcandidateafter psychometric assessment. An Out-bound Wilderness module wasdeliveredthatamalgamatedthetheoriesofleadershipandteamwork through practice to create posi-tive,lastingchange.Live Projects,thatwereduly sanctioned by MD & CEOs of theirrespective banks, were selected for chan-nelizingteamandindividualstoorganisa-

VII. LEADERSHIP DEVELOPMENT PROGRAMME

DevelopmentMethodology


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tionalgoalswhileleveragingonthelearn-ingsthroughthisprogram.Online Learning Modulewasincludedtoengageandinspireon functional aswell as leadership topics.The Spiritual ModulefocusedonSelf-evalua-tionandpersonalexplorations,forpersonalgrowth and to establish the possibility ofexploringthehigherdimensionsof life, inadditiontooptimizinghealthandsuccess.Finally, Motivational Speaker sessions werealsoincorporatedwitharoundtenreputed

(International/ Indian) thought leadershipsessions.

Selectionof theparticipantswasbasedonvarious assessments like Hogan, the Mo-tives, Values, Preferences Inventory, Func-tional Survey and In-person Assessmentsincluding the Competency and Develop-ment Potential Review. These assessmentswere leveraged to develop Individual De-velopment Plans (IDPs) for each of these

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2

3

4

5

Spiritual Programme

Live Project Reviews

Personal Growth Journey

Outbound Wilderness

Online Learning Module

Functional Development

Exploring Exponential Technologies for Innovation

Coaching

EffortdistributionofcandidatesonLDPcomponents(Scale0-5)

0 5 10 15 20Union Bank of India

UCO Bank


Punjab and Sindh Bank

Indian Overseas Bank

Indian Bank

Central Bank of India

Canara Bank

Bank of Maharashtra

Bank of India

Bank of Baroda

NumberofCandidates

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participantsthatwereusedintheCoaching.Themoduleswerescheduledoveraperiodof 9-10months to ensure that the partici-pantshadsufficienttimetoabsorbandprac-tice.Theeffortdistribution(computedasac-tualdaysofengagement)ofthecandidateswashighestfortheFunctionalModulesandPersonal Growth journey that were doneon-campus. The effort ononline learningwasalsoquitehighasestimatedbynumberofhoursspentbythecandidates.

The pool of participants:Participantswereselectedfromawidepoolof General Managers / Deputy GeneralManagersofPSBswithaminimumtenureofoneyearinexistingcapacityandaresid-ualserviceof4-5years.

Theselectionprocessentailsanassessmenton an identified range of competenciesand the preferences of the respectiveMD&CEOs.For2019-20,afinalshortlistof78participantswas arrived at from16banks(UnitedBankof Indiachose tonotrecom-mend any participant for the Programmefortheyear).

Programme DeliveryThe Programme was finally launched onJuly19,2019-onadaywhenbanknational-izationwasannounced50yearsagoin1969.All modules were delivered on schedule,barringafewduetotravelrestrictions.Allmodules finally culminated into a “LiveProject”,withtheintenttospuractionplansaimedatimprovingeachbank’soperationalandfinancialparameters.

The timelines for each of these interven-tionsincludingtheLiveProjectwerefixedsuchthattheprojectswereinitiatedduringthe 9-month schedule and their beneficialeffects continue toaccrue to thebankandindividualofficersthereafter.

Abriefdescriptionofthetimelinesisgivenin figurebelowon ‘DevelopmentMethod-ology’.

A team of six top executives from banksand senior Professors from IIMBangaloreguidedparticipantsthroughtheLiveProj-ectwiththreeformalreviews.

The First batch of LDP at IIM Bangalore


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Discovery Day WorkshopADiscoveryDayWorkshopwasheldfromJanuary03toJanuary05,2020atIIM,Ben-galuru. This workshop was designed toprovide tools to senior officers of the 10banks that went through amalgamationprocessasmandatedbytheGovernmentofIndia.Theobjectiveoftheworkshopwasto(i)Prepareseniorofficersforservingasacommunicationchannelwithineachofthebanks involved in themerger, (ii) Entrusttheseofficerstoreachoutacrossthemerg-ing banks highlighting the strengths andopportunitiesof their respectivebanks,asvisualisedbythemanagement;andfinally

(iii)Empowertheseofficerstocommunicatethesharedvisionandgoaltoallstakehold-ersacrossthemergingbanksandtoidenti-fy teamplayersacrossbanks that cancol-laborateinfutureprojects.

TheexpectedoutcomeoftheworkshopwastoAssess theorganisationalcultureof thebanksinvolvedinthemerger,beAwareoftheexactareasofsynergiesandgapsintheculture,Discussstrategiesbasedontheex-periencesofotherbanksandfinallyhaveaclearUnderstandingoftheHRchangesre-quired to reach theaspiredorganisationalculture.

DevelopmentMethodology

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Apartfromitsrecommendationsforvacan-cies, the Bureau makes other recommen-dationstotheGovernmentinlinewithitsmandate. Someof these recommendationshaveextensiveimplicationsforgovernanceand accountability frameworkswithin thePSBs.Allthemajorrecommendationsmadeby the Bureau till date have been sum-marized into18majorheads.Manyof therecommendationscoincidewiththegover-nance reformsagendaof theGovernment.Asapartofthisagenda,manygovernancereforms were undertaken in 2019-20. Asummary of these reforms introduced bytheGovernmentisgivenattheendofthischapter.TheBureauhasbeencontinuouslyevaluat-ingitsrecommendationsinlightofthedy-namicchanges to thecapitalandbusinessstructure of PSBs and feedback from thestakeholders.

SomeoftheimportantrecommendationsoftheBureauarementionedbelow.I. GOVERNANCE

(i) Separate Nomination and Remuner-ation Committee - Instead of a separateNominationCommitteeandaRemunerationCommittee – have a single committee viz.,NRC of the Boardwith amandate similartothatprescribedforCompaniesregistered

undertheCompaniesActaswellasbySEBIforlistedentities.

(ii) Exclusive Executive Director for Risk Management and Audit functions:Oneex-clusiveEDtohaveoversightofthesecondand third line of defense while reportingto theMD&CEOonly foradministrativepurposes.TheReportingAuthorityforthisED,willbetheRiskManagementCommit-teeoftheBoard(RMCB)aswellastheAu-ditCommitteeoftheBoard(ACB)andtheReviewing/AcceptingAuthoritywillbetheNRCoftheBoard.

TheNRCwillbetheReporting/Reviewing/AcceptingAuthorityforOtherEDsandtheMD&CEO–whoareapartofthefirstlineofdefence.Thefirstlineisexpectedtogen-erate revenueswithadequatecontrolsandtoassumeriskswithinthelimitssetbytheRMCB.

(iii) Term of Non-Executive Directors- Increase the current three-year term of aNon-ExecutiveDirectortofouryears,withamaximumoftwotermssubjecttoperfor-mance.

(iv) Manpower planning in PSBs: Whilebeing accountable for costs, productivityand risks, the Board, based on the bank’s

VIII. RECOMMENDATIONS ON GOVERNANCE


23

strategy,todecidetheheadcountrequiredateachlevel inthemanagementhierarchyoraddanyadditionallevelsbasedonbusi-nessrequirements.

(v) Role of Non-Official Directors- Non-Of-ficial Directors (NODs) includingNon-Ex-ecutiveChairpersons(NECs),althoughap-pointedbythegovernment,shouldperformtheroleof IndependentDirectoras ispre-scribedforCompaniesregisteredundertheCompaniesActaswellasbySEBIforlistedentities and therefore presently applicabletobanksotherthanPSBs.

(vi) Diversity in Boards-TheNRCshouldputinplaceaBoardDiversityPolicytoen-surethatthecommitteesoftheBoardwouldnotbedominatedbyanyoneindividualorsmallgroupofindividuals.NRCshouldbeempoweredtorecommendtotheBoardtheconstitution / reconstitution of any com-mitteeoftheBoardtoensurethatthecon-stitution is in accordance with guidelineswhich are ownership neutral and there isrotationofmembersonthecommittees.

(vii) Management Committee of the Board -ManagementCommitteeof theBoard tobe manned by management i.e., WholeTime Directors (This may require amend-ments in subordinate legislation).MCB toexercisesuchmanagementpowers,includ-ingcreditsanctioningpowers,asdelegatedbytheBoard.

II. APPOINTMENTS

(viii) Tenure of Whole Time Directors: MD&CEOshouldhaveaminimumtenureofthreeyearsirrespectiveofage.Thismin-imumthree-yeartenuremaygobeyond60yearsofage.

(ix) Internal Executive Director: One oftheExecutiveDirectorpositions tobeear-marked for candidates from within thebank.

III. COMPENSATION

(x). Remuneration for Non-Executive Di-rectors-TheBoard,basedontheproposaloftheNRC,todecideontheremuneration/compensation/feesoftheirNon-ExecutiveDirectors including Non-Executive Chair-personwithintheambitofguidelinespre-scribedforCompaniesregisteredundertheCompaniesActaswellasbySEBIforlistedentities and also prescribed byRBI for itsregulatedentities.

(xi). Performance based Compensation- Align compensationwith right individualandcollectiveperformancemetricsthrough‘Performancebasedcompensation’viz.,

a. EmployeeStockOptionScheme (ESOS),forrewardinglongtermperformance.

b. PerformanceLinkedIncentives(PLIs)forrewardingshorttermperformance.

IV. PERFORMANCE EVALUATION

(xii). Performance Evaluation of Part time

24

Directors-TheBoard,basedonacriteriondecided by the NRC, to assess its perfor-mance,performanceofitscommitteesandtheperformanceoftheindividualNon-Ex-ecutive Directors (NEDs)/Independent Di-rectors(IDs).

(xiii). Performance evaluation of Whole Time Directors and Senior Management: TheBoard,throughtheNRC,toundertakethePerformanceAssessmentofWTDs/Se-niorManagementPersonnel.

V. CREDIT GOVERNANCE, RISK MAN-AGEMENT AND AUDIT FUNCTIONS

(xiv) Composition of Risk Management Committee: RiskManagementCommitteeoftheBoardtohavethefollowingcompo-sition:

a. AllmembersincludingtheChairshouldbe NEDs/IDs.

b. Onlyexception:EDhavingoversightofsecondandthirdlineofdefence

c. Permanent invitees -ChiefRiskOfficer(CRO)andHeadofCompliancewhohasdirect reporting to theEDhavingover-sightofsecondandthirdlineofdefence.

d.Majorityofmembersshouldhaveexpe-rience of risk management issues andpractices.

Themandateof theRMCBshould interalia include setting the ‘Risk Appetite’ of thebank based on its ‘Risk Capacity’ & holdthe line management/first line of defenceaccountable.

(xv) Role of Chief Risk Officer:TheRMCBwiththeapprovaloftheBoardshouldde-cidetheroleforitscreditriskmanagementfunction/functionaries including ChiefRiskOfficer.

(xvi) Function of Credit Appraisal Com-mittee of the Board- Committee system of grantof loansshouldberestricted toonlyverylargevaluecreditproposals(withthesanctioning limits and other details to bedecidedbytheRMCB).TheCreditApprov-al Committee (CACB) in its present formmaybedispensed.TheMCBbereconstitut-edwithonlyWTDswhowouldundertakethemanagementfunctionoftheBoard.

TheRiskManagementCommittee(RMC)oftheBoardbegiven themandate todecideon the credit rating and credit exposurethresholdmatrixwithinwhichtheMCBaswellasvariousexecutivecommittees/indi-vidualstoundertakevariouscreditunder-writingdecisions.

(xvii) Powers to sanction loans: TheRiskManagementCommitteeoftheBoardtoal-locatethecreditsanctioningpowers/limitsbasedontheriskcapacityofthebank.

(xviii) Audit Committee of the Board (ACB): TheACBshouldhavethefollowingcompositionandcontrolstructures:

a. TohaveonlyNon-ExecutiveDirectors/Independent Directors, only exceptionbeingtheEDhavingexclusiveoversight


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ofsecondandthirdlineofdefence.b. Chair should not be the Chair of theBoard or any other committee of theBoard.

c. HeadofInternalAuditwhoreports tothe ED having exclusive oversight of

secondandthirdlineofdefence,shouldbeapermanentinvitee.

A report regarding the status of imple-mentation some of these recommenda-tionsisgivenintheboxbelow:

Governance & HR Reforms in Public Sector Banks through EASE

PSBsreformsagendaunderEASE(EnhancedAccessandServiceExcellence)wasrolled-outinNovember2017.Theagendaisanchoredaroundsixthemes–Responsiblebanking,Customer responsiveness,Creditoff-take,MSMEcoverage,Deepeningfinancial inclu-sionanddigitization,GovernanceandHR.Progressagainstthereformsagendaismeas-uredandbenchmarkedbyanindependentagencyandreportedpublicly.AspartoftheEASEreformsagenda,fivekeyHRreformshavebeeninstitutedinallthePSBs:a. Institutingadigitalizedperformancemanagement systemwith focuson enhanced

measurability and auto-population of data for scientific, transparent and objectiveperformanceappraisals.

b. IntroductionofJobFamiliesinallPSBstobuildspecializedcapabilitiesandsupportemployeestoacquirenew-ageskills.

c. ImplementingIT-basedHRdeploymentanddecisionsupportsystemtostreamlinetransfersprocessinPSBsandensureoptimaldeploymentofmanpower.

d. Institutingrole-basede-learningprogrammestoenhanceperformanceandimproveeffectivenessofemployeesintheirassignedroles.

e. DevelopingIndividualizedDevelopmentPlans(IDPs)formid-,senior-levelmanage-mentofPSBstoensureearlyidentificationandtrackingofdevelopmentalpriorities.

Inaddition,severalgovernancereformshavebeenlaidoutaspartofActionPoint21ofEASE3.0reformsagendafor2019-20and2020-21.a. Aligning theRoles and responsibilitiesofNon-OfficialDirectors to enable them to

functioninamannersimilartothatenvisagedforindependentdirectorsundertheprovisionsoftheCompaniesAct.

b. PerformanceevaluationofNon-officialDirectorsthroughpeer-review.c. Revisitingorganizationalstructureandoperationalsetupconsidering

• CreationofadditionalWTDpositionandCGM-level• MarketrecruitmentofChiefRiskOfficer(CRO)andamalgamations

d. Aligning WTD performance appraisal with Bank’s business goals and prioritiesthrough

• AllocationofWTD-wiseannualgoalsbasedonbusinessperformanceandpoten-tialandfinalizationofthesamebyApril30th.

• Incorporatingmid-yearreviewofprogressagainstthegoals.e. Puttinginplaceinstitutionalizedarrangementsforinductionandneed-basedspecial-

izedtrainingandpeer-evaluationofnon-officialdirectors.Source: Boston Consulting Group and DFS, Government of India

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TheBanksBoardBureauisapublicauthor-ity as defined in theRight to InformationAct, 2005. As such, Banks Board Bureauisobliged toprovide information tomem-bersofpublic.During theyear, theBoard

IX. RIGHT TO INFORMATION ACT, 2005

received 2 applications (7 in the previousyear)underRighttoInformationAct.Fur-ther,noappealswerefiledagainstreplies.Asummaryoftheapplicationsreceivedun-derRIAisgivenbelow.

2016-17 2017-18 2018-19 2019-20

No.ofapplications NIL* 19 7 2

No.ofAppealsreceived NIL* 1 1 NIL

* - The Bureau was designated as a public authority under the purview of RTI Act 2005 only during late 2016.

Table 3: RIAapplications


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Oneof themandates of theBureau is“To build a data bank containing data relating to the performance of PSBs/FIs.”. In this context, the Bureaureliesonpublishedfinancialresultsofthemandatedinstitutionsandoccasion-ally calls for additional information. Thedatabaseisusedtogeneratekeyratiosusedtoassesstherelativeandabsolutefinancialperformanceof thePSBs.TheBureaualsomaintainsadatabaseoftheBoardpositionsinallthemandatedinstitutionsthatisreg-ularlyupdated.TheBureaualsoundertakesstudiesonperformanceusingprimaryandsecondarydata.

IT Systems and Infrastructure

Hardware: The secretariat has sufficientPCs,Printers,VideoConferencingsystemsandotherITinfrastructurefor itsuninter-ruptedoperations.Premises: Thepremisesof theBureauareonleasefromReserveBankofIndia.Software: The process of accounting oftheBureauunderwentachangeduringtheyear 2019-20. The Bureau is now requiredtomaintain an accounting period conceptandalignitsreceiptsandpaymentsonac-crualbasis.Priorto2019-20,thereceiptsandpaymentswerebeingdoneoncashbasis.Inordertostandardizetheentireprocess,theBureauacquiredlicenseforTally9applica-

tionsoftwareandaftertwomonthsofpar-allelprocessing,wentliveonthesame.TheentiredatafortheyearwasmigratedontoTallyandreconciled.Thereafter,theentireprocessofaccounting,reconciliation,auditandpreparation of final accounts is beingdoneonTally9.

Hitherto, the Bureau was conducting allits surveys, collecting applications for po-sitions etc. either on email or manually.During theyear, theBureaudevelopedanonline system for conducting surveys andcollectingapplicationsfromcandidateson-line. The Bureau has acquired licenses onSurveyMonkeyportalforthepurposesinceSeptember2019.

The Bureau was hitherto using standardemails forcommunicatingwithstakehold-ers.Aneedwas felt toensure thatall im-portant communications are verified andprotectedwith a tamper-evident seal. TheBureauhasa license fore-signapplicationusage on the E-mudhra portal for digitalsignatures of the documents. Since its ac-quisition, all communications are beingdigitallysigned.

It uses licensed MS Office 365 and Win-dowsOperatingsystemonitsdesktopsandlaptops.

X. DATABASE, ANALYTICS AND IT SYSTEMS

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The Bureau uses a Twit ter handle(@BanksBoardBuro)anditsofficialwebsitehttps://www.banksboardbureau.org.in fordisseminationofinformation.

TheBureaureceivesanddispatchesnumer-ous communication to stakeholders andwasusingsimple spreadsheet for trackingthesame.Aneedwasfelttohaveapropersoftwaresystemto improve thedocumentmanagement.TheBureauhasinternallyde-veloped aDocumentManagement Systemforrecordmanagement.

PriortoMarch2020,majorityoftheBureaumeetings were held in-person with mem-

bersoccasionallyjoiningovervideoconfer-encing. Further, the candidates invariablywere required to be physically present atthevenue.Inordertocreateavirtual,safeand secure system for conduct of Bureaumeetings and for interacting with candi-dates,theBureauhasacquiredlicensesforCiscoWebExVideo conferencing. TheBu-reauhasalsodesignednecessaryprocesses,agreementsandprotocolsaround theWe-bEx system. SinceMarch 2020, all interac-tionsandmeetingsoftheBureauhavebeendone online without the need for eithercandidatesormembers tomovetoanyal-ternatelocation.


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Receipts: The Receipts of the Bureau areinflows fromvariousPublic SectorBanks,Insurance companies and Financial Insti-tutionsthatarecurrentlywithintheremitoftheBureau.Theexpenses(bothincurredand projected) are divided among the in-stitutioncategoriesi.e.PublicSectorBanks,Insurance companies and Financial Insti-tutions,inproportionofthevacanciesthatwere serviced by the Bureau. As per theextantdirections,thenodalinstitutionsforPSBs is State Bank of India, for InsuranceCompanies is IRDAI and for Financial In-stitutionsisNABARD.Theduesfor2019-20havebeen received fromStateBankof In-dia,NABARD,andIRDAI.

As per the revisedACC guidelines appli-cablefor2019-20onwards,theBureauisre-quired toproject its expenses anddistrib-uteitamongtheinstitutionsinproportionof thevacanciesasonApril 1of theyear.Accordingly, the Bureau hasmade projec-tionsofitsexpensesfor2020-21andraiseddemandonSBI,IRDAIandNABARD.Thepayment from SBI, NABARD and IRDAIhavebeenreceivedfor2019-20.Theamountclaimedforprojectedexpenses for2020-21hasbeenupfrontpaidbySBIandNABARD.

The receipts and payments of the Bureauareroutedthroughanaccountmaintained

atReserveBankofIndia.

Payments: Themajor payments related toleaserentalstowardshiringofpremisesatMumbai and personnel costs that are re-imbursed toReserveBankof India.Theseconstitute the recurring expenses for theBureau.

The External HR agency charges are in-curredforassessmentandbackgroundver-ificationofcandidates.

Therearenofixedassetsasmajorityofthefixtures,furnitureandcomputerhardwareetc. are provided by RBI. Minor items ofhardware are considered as revenue ex-pense.

Intermsofefficiency,theTalentAcquisitionCost(TotalExpensesdividedbynumberofvacancies)worksouttoRs.17.4lakhperva-cancyfor2019-20.

XI. RECEIPTS AND PAYMENTS ACCOUNT

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PAYMENTS RECEIPTS

Particulars Amount Amount Particulars Amount Amount

Advertisement Charges 32,83,510 Reimbursement Received

Personnel Cost 1,46,49,474 StateBankofIndia 1,06,41,265

Staff Welfare Expenses 6,32,104

Rental Charges 63,90,000 Excess of Expenditure(Payment)Over Reimbursement (Receipts) for Year and to be received in Subsequent year

2,06,34,952

Travelling Expenses

Fare 8,84,353

HotelCharges 4,68,595

CarHire 2,02,537 15,55,485

External HR Agencies Charges

18,46,700 (Outofthesaidamount,anamount of Rs 1,56,38,108/- is receivedfromNABARDonJune30,2020)

Sitting Charges

ExpertsforLDP6 1,20,000

FIExpertMembers 8,00,000

PSBExpertMember 10,50,000 19,70,000

Purchase of Assets

OfficeEquipment 1,91,119

OfficeFurniture 1,70,144

InteriorforOffice 40,497 4,01,760

Software Charges 97,451

Printing,Postage,Stationery,-Consumables

2,77,236

Telecommunication Charges 28,106

Miscellaneous Expenses 1,44,391

TOTAL 3,12,76,217 TOTAL 3,12,76,217

Receipts and Payment Statement for the year ended 31st March 2020(Rupees)

6. Sitting fees paid to Panel members, setup for review of Live Projects under the Leadership Development Program


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board€¦ · during the year, the board ix. right to information act, 2005 received 2 applications...

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