All You Need To Know About Former CAG Vinod Rai’s Appointment As Banks Board Bureau Chairman

Al Arafat Sherfuddeen

March 1st, 2016 / 4:03 PM

Image Source: huffpost, thehindulfl

Former CAG Mr. Vinod Rai has been named as the first chairman of Banks Board Bureau. Controversy has erupted over his appointment and the constitutional validity of the same.

What is Banks Board Bureau?
1.) Bank’s Board Bureau (BBB) will help the government appoint heads of public sector banks and advice on banking reforms.
2.) Other members of BBB include Anil K Khandelwal, former CMD at Bank of Baroda; HN Sinor, former joint MD at ICICI Bank; and, Rupa Kudwa, former MD & CEO at CRISIL. Financial services secretary, deputy governor of the Reserve Bank of India and secretary public enterprises will be ex-official members.
3.) BBB is part of the series of Banking reforms which Mr. Narendra Modi & Mr. Arun Jaitley had announced earlier.
4.) The setting up of BBB is widely believed to address the growing NPA’s of the banking sector which stands at 4 lakh crore besides facilitating strategies for all the banks to raise to adhere to the Basel III norms (It is a global, voluntary regulatory framework on bank capital adequacy, stress testing, and market liquidity risk. It was agreed upon by the members of the Basel Committee on Banking Supervision in 2010–11, Basel III focuses primarily on the risk of a run on the bank by requiring differing levels of reserves for different forms of bank deposits and other borrowings.)
5.) They will also constantly engage with the Board of Directors of all the public sector banks to formulate appropriate strategies for their growth and development. The bureau will search and select heads of public sector banks and help them develop differentiated strategies of capital raising plans to innovative financial methods and instruments. It would also be responsible for the selection of non-executive chairman and non-official directors on the boards.


 Who is Mr. Vinod Rai?

Vinod Rai was the 11th Comptroller and Auditor General of India. A Kerala cadre IAS officer who had served as the district collector of Thrissur district of Kerala before going on to becoming the Comptroller And Auditor General of India. Mr. Rai was the Comptroller and Auditor General between January 2008 and May 2013, during which a number of CAG reports led to various scams including in the telecom and coal sectors coming to light. Vinod Rai recommended that all private-public partnerships (PPPs), “Panchayati Raj Institutions” and societies benefiting from government funds should come within the ambit of the CAG and he also noted that 60 percent of government spending does not currently come under the scrutiny of the CAG.

Is Mr. Vinod Rai’s appointment unconstitutional?

Under Article 148 (4) of the constitution, “the Comptroller and Auditor-General shall not be eligible for further office either under the Government of India or under the Government of any State after he has ceased to hold his office. ”

The opposition cites article 148(4) to invalidate Mr. Vinod Rai’s naming as the first chairman of Banking Board Bureau. However, the government has struck back by saying the role is “advisory” in nature and hence not within the ambit of Article 148 (4). It is worthwhile noting that Mr. Arun Jaitley had questioned the previous government’s decision to assign former CAG V.K. Shunglu to head a committee to probe the CWG scam.


The Logical Indian congratulates Mr. Vinod Rai for his service to the nation and in his recent naming as chairman of Banking Boards Bureau (BBB). We hope his appointment and advice given will go a long way in curbing the rising Non-Performing Asset’s of the Banking sector which threatens to destabilize the sector and the economy as a whole.  


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