Besides, H.N. Sinor, Anil K Khandelwal and Rupa Kudwa have been appointed members.

Former CAG Vinod Rai was on Sunday appointed first Chairman of the Banks Board Bureau, which will advise the government on top-level appointments at public sector lenders and ways to address the bad loans problem among other issues.

Besides, ICICI Bank’s former Joint Managing Director H.N. Sinor, Bank of Baroda’s former CMD Anil K Khandelwal and rating agency CRISIL’s former chief Rupa Kudwa have been appointed members.

In a statement, the government said Prime Minister Narendra Modi has approved the proposal of the Department of Financial Services for the constitution of Banks Board Bureau (BBB) with the named persons as “part-time Chairman/Members, besides the ex-officio official members, for a period of two years”.

There was no immediate comment from Mr. Rai, who is currently in Singapore. The bureau has been set up at a time when public sector banks are grappling with a huge problem of bad loans with their collective gross NPAs (Non Performing Assets) approaching Rs. 4 lakh crore level.

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.

The bureau will give recommendations on appointment of directors in public sector banks and advise on ways to raise funds and mergers and acquisitions to the lenders.

There are 22 state-owned banks in India including SBI, IDBI Bank and Bhartiya Mahila Bank.

The BBB was earlier proposed by the government as a body of eminent professionals and officials, which will replace the Appointments Board for appointment of Whole-time Directors as well as non-Executive Chairman of PSBs.

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 selection of non-executive chairman and non-official directors on the boards.

Besides, the body will also steer strategy discussion on consolidation based on the requirement.

The government wants to encourage bank boards to restructure their business strategy and also suggest way forward for their consolidation and merger with other banks.