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Q34 (IAS/2022) Economy › Money, Banking & Inflation › Banking regulation reforms Official Key

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:

Result
Your answer: —  ·  Correct: B
Explanation

The correct answer is Option 2 (2 and 3 only). The Banks Board Bureau (BBB), now replaced by the Financial Services Institutions Bureau (FSIB), was established based on the recommendations of the P.J. Nayak Committee to improve governance in Public Sector Banks (PSBs).

  • Statement 1 is incorrect: The Chairman of the BBB is not the Governor of the RBI. The Chairman is an eminent person/professional appointed by the Central Government, often a former bureaucrat or veteran banker.
  • Statement 2 is correct: A primary function of the BBB is to recommend candidates for the selection of heads (MDs and CEOs) and whole-time directors for PSBs and other public financial institutions.
  • Statement 3 is correct: Beyond recruitment, the BBB was mandated to advise PSBs on developing business strategies, organizational restructuring, and formulating effective capital-raising plans to strengthen their balance sheets.

Thus, statements 2 and 3 accurately reflect the mandate of the BBB, making Option 2 the right choice.

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Each bar shows the % of students who chose that option. Green bar = correct answer, blue outline = your choice.
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Don’t just practise – reverse-engineer the question. This panel shows where this PYQ came from (books / web), how the examiner broke it into hidden statements, and which nearby micro-concepts you were supposed to learn from it. Treat it like an autopsy of the question: what might have triggered it, which exact lines in the book matter, and what linked ideas you should carry forward to future questions.
Q. With reference to the 'Banks Board Bureau (BBB)', which of the following statements are correct? 1. The Governor of RBI is the Chairman …
At a glance
Origin: Books + Current Affairs Fairness: Moderate fairness Books / CA: 7.5/10 · 2.5/10

This is a classic 'Body-Composition-Mandate' question. The trap in Statement 1 is a recurring UPSC template: swapping the specific Chairman of a specialized body with a generic high-profile figure like the PM or RBI Governor. If you knew BBB was created to 'professionalize' appointments (Indradhanush reforms), you would deduce it needs an independent chair, not the regulator itself.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
Is the Governor of the Reserve Bank of India the Chairman of the Banks Board Bureau (BBB)?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"Banks Board Bureau chief Vinod Rai."
Why this source?
  • Explicitly names the Banks Board Bureau chief as an individual (Vinod Rai), indicating the BBB has its own chief/chairman.
  • Naming a specific person as BBB chief implies the role is distinct and not automatically held by the RBI Governor.
Web source
Presence: 4/5
"The bureau started functioning from April 1, 2016 as an autonomous recommendatory body and has seven members, including the chairman."
Why this source?
  • States the BBB 'started functioning... as an autonomous recommendatory body and has seven members, including the chairman', indicating an independent chairman position.
  • Mentions cooperation with the RBI and government, but lists secretaries as members — suggesting the chairman is part of the bureau's own membership, not necessarily the RBI Governor.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > 7.36 Indian Economy > p. 192
Strength: 5/5
“• BBB comprises a Chairman and six members (out of which three are ex-officio). The present chairman of BBB is Bhanu Pratap Sharma. BBB is headquartered in Mumbai.”
Why relevant

States BBB 'comprises a Chairman and six members' and names the present chairman (Bhanu Pratap Sharma), implying the bureau has a distinct, named chair.

How to extend

A student could check if the named chairman is the RBI Governor (using a current roster or list of RBI governors) to see if the posts coincide.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Banks Board Bureau > p. 191
Strength: 4/5
“• Based on the recommendations of P.J. Nayak Committee, Banks Board Bureau (BBB) was set up in 2016 as an autonomous recommendatory body to improve the governance of Public Sector Banks (PSBs). • BBB was also one of the seven aspects of the Indradhanush plan of Government which deals with revival of PSBs. • The main function of BBB is to recommend the name of Heads of PSBs and financial institutions. Moreover, it also advises on ways of raising funds and dealing with the issue of stressed assets.”
Why relevant

Describes BBB as an autonomous recommendatory body set up by the government to handle PSB governance and appointments.

How to extend

A student could infer that 'autonomous' bodies often have independent chairs appointed by government and then verify appointment rules to see if RBI Governor typically holds that chair.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 3: Money and Banking - Part II > P J NAYAK Committee > p. 129
Strength: 3/5
“And once BIC is set up, BBB will be dissolved. In line with the recommendations of the P J Nayak committee and with a view to improve the Governance of Public Sector Banks (PSBs), the GoI appointed an autonomous Banks Board Bureau (BBB) but it was later on replaced by Financial Services Institutions Bureau (FSIB) from 1st July 2022.”
Why relevant

Notes institutional change: BBB was replaced by FSIB from 1 July 2022, indicating BBB is a government-created institutional entity distinct from RBI structures.

How to extend

Using this, a student could check whether the RBI Governor commonly chairs similarly created government bureaus or if separate leadership is installed.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 3: Money and Banking - Part II > Reserve Bank of India > p. 130
Strength: 4/5
“He draws his powers from the RBI Act and not from the Central Board. He is appointed by the Prime Minister in consultation with the Finance Minister. The RBI Board has no say whatsoever in his appointment. In a company, the board of directors chooses one of its own to be appointed as the managing director. In the RBI, the Governor secures board membership only after he is appointed to the post. It is, thus, wrong to compare a corporate board to the RBI's and suggest that the Governor is subservient to it. In RBI, policy decisions are taken by the Governor with its 4 deputy governors and the (Central) Board is just engaged in providing a broader vision to the RBI.”
Why relevant

Explains the Governor draws powers from the RBI Act, is appointed by the PM in consultation with the FM, and emphasizes RBI governance is separate (Governor and deputy governors form functional leadership distinct from a central board).

How to extend

A student could use this separation of RBI authority to argue chairing an external bureau (like BBB) is not automatic and then verify statutory membership/appointment provisions of BBB.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 2.14 RBI and its Functions > p. 65
Strength: 3/5
“The objective of RBI is "to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage; to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth; to maintain macroeconomic stability and financial stability." The RBI affairs are governed by a central board of directors (Maximum 21 in number including the governor and four deputy governors who are also on the central board) who are appointed by the government of India in keeping with the Reserve Bank of India Act 1934 for a period of 4 years.”
Why relevant

States the central board of RBI includes the governor and deputy governors as members appointed by the government under RBI Act, highlighting the specific statutory basis for RBI offices.

How to extend

A student could contrast the statutory basis for RBI offices with appointment provisions for BBB chair to test whether the RBI Governor legally occupies the BBB chair by virtue of office.

Statement 2
Does the Banks Board Bureau (BBB) recommend candidates for the selection or appointment of heads of Public Sector Banks in India?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Banks Board Bureau > p. 191
Presence: 5/5
“• Based on the recommendations of P.J. Nayak Committee, Banks Board Bureau (BBB) was set up in 2016 as an autonomous recommendatory body to improve the governance of Public Sector Banks (PSBs). • BBB was also one of the seven aspects of the Indradhanush plan of Government which deals with revival of PSBs. • The main function of BBB is to recommend the name of Heads of PSBs and financial institutions. Moreover, it also advises on ways of raising funds and dealing with the issue of stressed assets.”
Why this source?
  • Explicitly identifies BBB as an autonomous recommendatory body set up to improve governance of PSBs.
  • States the main function is to recommend the name of Heads of PSBs and financial institutions.
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 3: Money and Banking - Part II > P J NAYAK Committee > p. 129
Presence: 4/5
“And once BIC is set up, BBB will be dissolved. In line with the recommendations of the P J Nayak committee and with a view to improve the Governance of Public Sector Banks (PSBs), the GoI appointed an autonomous Banks Board Bureau (BBB) but it was later on replaced by Financial Services Institutions Bureau (FSIB) from 1st July 2022.”
Why this source?
  • Notes BBB was appointed to improve governance of Public Sector Banks, providing contextual support for its role in senior appointments.
  • Records institutional evolution (replacement by FSIB), indicating BBB's formal place in the appointment framework.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > 7.36 Indian Economy > p. 192
Presence: 3/5
“• BBB comprises a Chairman and six members (out of which three are ex-officio). The present chairman of BBB is Bhanu Pratap Sharma. BBB is headquartered in Mumbai.”
Why this source?
  • Describes BBB's official composition (chairman and members), confirming it is a formal institutional body responsible for governance tasks.
  • Provides organizational detail that supports BBB being empowered to perform functions such as recommending appointments.
Statement 3
Does the Banks Board Bureau (BBB) help Public Sector Banks in India to develop strategic plans?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Banks Board Bureau > p. 191
Presence: 4/5
“• Based on the recommendations of P.J. Nayak Committee, Banks Board Bureau (BBB) was set up in 2016 as an autonomous recommendatory body to improve the governance of Public Sector Banks (PSBs). • BBB was also one of the seven aspects of the Indradhanush plan of Government which deals with revival of PSBs. • The main function of BBB is to recommend the name of Heads of PSBs and financial institutions. Moreover, it also advises on ways of raising funds and dealing with the issue of stressed assets.”
Why this source?
  • Describes BBB as an autonomous recommendatory body created to improve governance of PSBs, which implies an advisory/oversight role over bank strategy.
  • Specifically lists BBB functions: recommending heads of PSBs and advising on raising funds and dealing with stressed assets — advisory inputs that relate to strategic decision areas for banks.
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 3: Money and Banking - Part II > P J NAYAK Committee > p. 129
Presence: 3/5
“And once BIC is set up, BBB will be dissolved. In line with the recommendations of the P J Nayak committee and with a view to improve the Governance of Public Sector Banks (PSBs), the GoI appointed an autonomous Banks Board Bureau (BBB) but it was later on replaced by Financial Services Institutions Bureau (FSIB) from 1st July 2022.”
Why this source?
  • States BBB was appointed in line with P.J. Nayak committee recommendations to improve governance of PSBs, reinforcing its mandate on governance and high-level guidance.
  • Notes BBB was an autonomous body (later replaced), which supports interpreting its role as providing strategic/management-level advice rather than routine operations.
Statement 4
Does the Banks Board Bureau (BBB) assist Public Sector Banks in India with capital raising plans or strategies?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Banks Board Bureau > p. 191
Presence: 5/5
“• Based on the recommendations of P.J. Nayak Committee, Banks Board Bureau (BBB) was set up in 2016 as an autonomous recommendatory body to improve the governance of Public Sector Banks (PSBs). • BBB was also one of the seven aspects of the Indradhanush plan of Government which deals with revival of PSBs. • The main function of BBB is to recommend the name of Heads of PSBs and financial institutions. Moreover, it also advises on ways of raising funds and dealing with the issue of stressed assets.”
Why this source?
  • Directly states BBB 'advises on ways of raising funds', which is equivalent to assisting with capital-raising strategies.
  • Describes BBB as an autonomous recommendatory body created to improve PSB governance, implying an advisory mandate over such strategic issues.
Pattern takeaway: UPSC consistently tests the 'Governance Structure' of financial bodies. The pattern is to confuse the Regulator (RBI) with the Selector/Administrator (BBB). Always distinguish between who regulates the game and who picks the players.
How you should have studied
  1. [THE VERDICT]: Sitter. Covered explicitly in standard texts (Singhania Ch. 7, Vivek Singh Ch. 3) and was a major current affair (Vinod Rai's appointment).
  2. [THE CONCEPTUAL TRIGGER]: Banking Sector Reforms (specifically the P.J. Nayak Committee and the Indradhanush Plan).
  3. [THE HORIZONTAL EXPANSION]: 1. FSIB (replaced BBB in 2022). 2. FSIB Mandate: PSBs + Public Sector Insurers. 3. Indradhanush 7 Pillars: Appointments, BBB, Capitalization, De-stressing, Empowerment, Framework of Accountability, Governance Reforms (ABCDEFG). 4. FSDC: Chaired by Finance Minister (not RBI Gov).
  4. [THE STRATEGIC METACOGNITION]: When studying any regulatory body, fill a 4-column table: (1) Origin (Act/Executive Order), (2) Chairman (Ex-officio vs. Appointee), (3) Statutory Status, (4) Key Mandate. Statement 1 fails column 2.
Concept hooks from this question
📌 Adjacent topic to master
S1
👉 Banks Board Bureau: composition and mandate
💡 The insight

BBB is a separate autonomous body with its own chairman and multiple members responsible for recommending leadership for PSBs and advising on stressed assets.

High-yield for questions on PSB governance and financial-sector reforms: knowing BBB's structure and mandate helps answer questions on appointment mechanisms, PSB revival measures (Indradhanush), and governance reforms. It links to broader topics like PSU management and financial regulation, enabling candidates to tackle source-based questions and compare institutional roles.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > 7.36 Indian Economy > p. 192
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Banks Board Bureau > p. 191
🔗 Anchor: "Is the Governor of the Reserve Bank of India the Chairman of the Banks Board Bur..."
📌 Adjacent topic to master
S1
👉 RBI Governor: appointment and institutional role
💡 The insight

The Governor is a distinct, appointed office within the RBI's governance framework and not automatically the head of other autonomous bodies.

Important for questions on central bank governance and executive appointments: understanding how the Governor is appointed and the Governor's position vis-à-vis other boards clarifies limits of the office and avoids conflating RBI leadership with chairmanships of separate bodies. This concept connects to constitutional/administrative questions about autonomy and appointment procedures.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > 7.6 Indian Economy > p. 162
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 3: Money and Banking - Part II > Reserve Bank of India > p. 130
🔗 Anchor: "Is the Governor of the Reserve Bank of India the Chairman of the Banks Board Bur..."
📌 Adjacent topic to master
S1
👉 Institutional change: BBB replaced by FSIB
💡 The insight

BBB was superseded by the Financial Services Institutions Bureau (FSIB) from 1 July 2022, changing the institutional landscape for PSB appointments.

Useful for chronology and current-affairs questions: UPSC often tests institutional reforms and timelines. Knowing when and how BBB was replaced helps answer questions about current institutional arrangements for public sector bank governance and appointments.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 3: Money and Banking - Part II > P J NAYAK Committee > p. 129
🔗 Anchor: "Is the Governor of the Reserve Bank of India the Chairman of the Banks Board Bur..."
📌 Adjacent topic to master
S2
👉 Banks Board Bureau — core mandate
💡 The insight

BBB's core mandate is to recommend heads of Public Sector Banks and advise on PSB governance.

High-yield for questions on banking governance and institutional roles; links public administration (appointments) with financial sector reforms and helps answer 'who appoints/ recommends' style questions.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Banks Board Bureau > p. 191
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > 7.36 Indian Economy > p. 192
🔗 Anchor: "Does the Banks Board Bureau (BBB) recommend candidates for the selection or appo..."
📌 Adjacent topic to master
S2
👉 P.J. Nayak Committee and PSB governance reform
💡 The insight

The P.J. Nayak Committee recommendations led to creation of BBB as part of reforms to improve PSB governance.

Important for questions on reform drivers and policy responses in the banking sector; connects committee recommendations to institutional changes and enables analysis of reform outcomes.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Banks Board Bureau > p. 191
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 3: Money and Banking - Part II > P J NAYAK Committee > p. 129
🔗 Anchor: "Does the Banks Board Bureau (BBB) recommend candidates for the selection or appo..."
📌 Adjacent topic to master
S2
👉 Institutional evolution: BBB → FSIB
💡 The insight

BBB was a transitional autonomous body that was later replaced by the Financial Services Institutions Bureau (FSIB).

Useful for current-affairs and institutional-history questions; shows how governance mechanisms evolve and where appointment responsibilities may migrate — helps answer timeline and reform-impact questions.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 3: Money and Banking - Part II > P J NAYAK Committee > p. 129
🔗 Anchor: "Does the Banks Board Bureau (BBB) recommend candidates for the selection or appo..."
📌 Adjacent topic to master
S3
👉 Banks Board Bureau (BBB) — mandate and advisory role
💡 The insight

BBB is an autonomous recommendatory body created to improve governance of Public Sector Banks and to advise on leadership, fundraising and stressed assets.

High-yield for questions on PSB governance and reform: explains a mechanism through which the Centre sought to influence bank strategy and leadership without direct managerial takeover. Links to topics on institutional reform, bank governance, and state ownership.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Banks Board Bureau > p. 191
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > 7.36 Indian Economy > p. 192
🔗 Anchor: "Does the Banks Board Bureau (BBB) help Public Sector Banks in India to develop s..."
🌑 The Hidden Trap

The Financial Services Institutions Bureau (FSIB), which replaced BBB, now also recommends heads for Public Sector Insurance Companies (like GIC, LIC), expanding the mandate beyond just banks. Note: The final appointment authority is the ACC (Appointments Committee of the Cabinet), not the Bureau itself.

⚡ Elimination Cheat Code

The 'Conflict of Interest' Logic: The RBI is the regulator of banks. If the RBI Governor were the Chairman of the body selecting Bank CEOs, the regulator would be selecting the very people it regulates. This violates the principle of separation of powers. Also, the 'Overburdened Governor' rule: The Governor chairs the MPC and RBI Board; he rarely chairs external administrative bureaus.

🔗 Mains Connection

GS-4 (Corporate Governance): The BBB/FSIB represents the principle of 'Professionalizing Boards' and separating ownership (Govt) from management (PSB Heads) to reduce political interference—a key case study for PSU ethical governance.

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