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Centre was forced to form Appointments Board to select chiefs of 4 financial institutions

The new board, headed by financial services secretary Anjuly Chib Duggal, will start the candidate interview process this week.

, ET Bureau|
Updated: Jun 22, 2017, 12.20 AM IST
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BBB presently has nine members, including Duggal and RBI deputy governor NS Vishwanathan.
BBB presently has nine members, including Duggal and RBI deputy governor NS Vishwanathan.
The government was forced to constitute a new mechanism, the Appointments Board, to select chiefs of four key financial institutions because the Vinod Rai-headed Banks Board Bureau (BBB) “refused” to conduct interviews for two of these posts, senior government officials told ET.

The new board, headed by financial services secretary Anjuly Chib Duggal, will start the candidate interview process this week. It was set up recently in the wake of a long exchange of missives between the finance ministry and BBB, these officials said. They spoke on the condition they not be identified.

ET’s efforts to contact Rai, the former Comptroller and Auditor General of India, were not successful on Wednesday. Emails, text messages and WhatsApp messages sent to him remained unanswered at the time of going to press. Calls by ET were not answered either.

ABBB official, not willing to be identified, told ET that “BBB had nowhere said it will not undertake interviews to filling up posts in financial institutions, as part of the mandate given to it, and even dates had been communicated to the finance ministry for the interviews”.

He did not elaborate on why the government in that case chose to go for a new Appointments Board. The letter trail between the ministry and BBB related to appointing chiefs in the India Infrastructure Finance Company Ltd (IIFCL), Industrial Finance Corporation of India (IFCI), Export-Import Bank of India (Exim Bank) and Small Industries Development Bank of India (Sidbi).

“BBB told the finance ministry it will conduct interviews for Exim Bank and Sidbi jobs only. It said selecting candidates for the other two jobs – chiefs of IIFCL and IFCI – were not in its ambit because these institutions are non-banking financial institutions (NBFCs),” a senior official said.

The government’s response was that IIFCL and IFCI, to the extent they were financial institutions regulated by RBI, fell under BBB’s purview. The government had set up BBB with Rai as chairman in April 2016. The aim was to fast-track appointments of heads of public sector banks and financial institutions. BBB conducts interviews for these posts and submits its recommendation to the government.

The Appointments Committee of the Cabinet (ACC) headed by the PM finally selects the candidate. BBB presently has nine members, including Duggal and RBI deputy governor NS Vishwanathan. Giving details, another official familiar with the matter said 150 applications for these top jobs in these four institutions were received once the posts were advertised. Quick appointment was crucial since some of these posts had been vacant for six months, this official added.

He also said the first batch of applications were screened and a shortlist of three dozen names for the four posts was sent to BBB. Some candidates had applied for more than one job. “But BBB wrote back in April to government saying it will not conduct interviews for the top posts in IFCI and IIFCL,” another senior official said. ET has learnt that in a letter on April 28, the government appealed to BBB to re-consider its stand and pointed out that there were only 5 ‘unique candidates’ whose interviews needed to be conducted for completing the process for all 4 posts.

“It would have hardly taken the BBB two hours to interview those 5 candidates. But they stuck to a technicality,” the official quoted above said. The government made the point that if BBB’s logic was to be followed, then a candidate who had applied for a job in, say, Exim Bank and IIFCL would have to be interviewed by two different panels.

The official said this was procedurally undesirable approach and was also vulnerable to legal challenge from a candidate. It is this context, after having failed to persuade BBB, that the government set up the new Appointments Board, after taking the approval of the ACC. The official quoted above said the process of constituting the new panel has delayed appointments in these key positions by “another couple of months” but added that the “government had no choice given BBB’s stand”. He added that four BBB members — Duggal, Vishwanathan, Allahabad Bank’s former chairman Subhalaxmi Panse and IndAsia promoter Pradip Shah, have been made members of the new Appointments Board.

BBB chief Rai and four other BBB members are not part of the new panel. Another official said the government holds Rai “in high regard” but that “the BBB’s stand on this issue left the government with no choice but create an alternative”.

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