This article is written by Neeraj Salodkar.
The Institute of Banking Personnel (IBPS) is an autonomous body that has the function to conduct examinations for the posts in Public Sector Banks, SBI, Associate Banks of SBI, RBI, NABARD, SIDBI, few Cooperative Banks, LIC, and Insurance which are the regular members of the IBPS society.
It is registered under the Societies Act, 1860 and also as a Public Trust under the Bombay Trust Act, 1950. It is created to render assistance to organizations in personnel such as recruitment, selection, placement, designing and developing suitable measurement tests/tools, assessing answer responses and processing results of examinations, and conducting such examination-related service, on request.
The Right to Information Act, 2005 was passed to provide public accessibility and accountability for government affairs. It was said that the government had complete knowledge about its citizens; their name, address, phone number, email address, income (via income tax returns, rations cards, etc.), any health issues, etc. Conversely, the citizens had no idea about the affairs of the government that they had elected. To overcome this issue, the Act was passed. It should be noted that the Act only extends to Public Authorities, the phrase which is defined in the Act.
A public authority is defined in Section 2(h) of the Right to Information Act, 2005 as follows:
“Public authority” means any authority or body or institution of self-government established or constituted—
- by or under the Constitution;
- by any other law made by Parliament;
- by any other law made by State Legislature;
- by notification issued or order made by the appropriate Government, and includes any—
a. body owned, controlled, or substantially financed;
b. non-Government organization substantially financed, directly or indirectly by funds provided by the appropriate Government.
History of IBPS
The journey of IBPS is closely associated with a major event in the economic arena of the country; the Nationalisation of 14 major Banks in 1969, and thereafter, the establishment of NIBM as an apex-level research and training institute of all public sector Banks, almost at the same time.
After the Nationalisation of the Banks in 1969, the Banks were required to open more and more branches to avail of “Banking Services” in the country. Banks started expanding their branch network, but it was not possible without the recruitment of new employees. Managing the Critical and Crucial activity of “Selecting Right People for the Right Jobs” was a big task for the banks. At the same time, the selection process of the banks, which they were following those days, was not a uniform, standard & scientific selection process. Besides this, some Sr. People in the Banks were of the opinion that the traditional system of selecting employees had no clarity regarding the characteristics to be measured in the selection process and their relevance to subsequent on-the-job performance and career growth of the selectees.
Since Banks were Public Sector Organisations, “Public Accountability” was also a major guiding principle for them. It was necessary for them to adopt a selection system that should be open to all eligible and qualified applicants. It should be fair, impartial, effective and should select only those candidates who are “most suitable” for the job. But since Branch Expansion was the priority of the banks, they started advertising their vacancies. As expected, they were flooded with applications of many well-qualified candidates. The personnel departments of the banks were not equipped to handle this voluminous activity. Therefore, some of them approached NIBM, which designed a new Selection Testing Process for the Banks and launched it in some parts of the country. The new system got spontaneous acceptance from the banking industry. As a result, more and more banks voluntarily started using this new service. As the demand increased substantially, it was decided to constitute a small Personnel Selection Service (PSS) unit to handle these projects. A few years later in the year 1984, the same PSS Unit of NIBM was converted into IBPS and Dr. A. S. Deshpande, who was then Professor in-charge of PSS Unit, became its founder Director.
The entire three paragraphs have been copied in toto from the website of the IBPS.
The governing board of IBPS
Following are the members of the Governing Board of IBPS:
- Chairman: Shri Rajkiran Rai. (Currently the head of Union Bank of India, which is a Public Sector Bank).
- Member: Shri Jose J Kattor (Currently the Executive Director of the RBI).
- Member: Dinesh Kumar Khara (Currently Chairman of the SBI).
- Member: Dr. G R Chintala (Chairman of NABARD).
- Member: AS Rajeev (Managing Director and CEO of Bank of Maharashtra).
- Member: Ms. Padmaja Chunduru (Managing Director and CEO of Indian Bank).
- Member: CH. SS Mallikarjuna Rao (Managing Director and CEO of Punjab National Bank).
- Member: Atanu Kumar Das (Managing Director and CEO of Bank of India).
- Member: Matam Venkata Rao (Managing Director and CEO of the Central Bank of India).
- Member: DB Phatak (Profession Emeritus at IIT Bombay).
- Member: Biswa Ketan Das (CEO of Indian Banking and Finance).
- Member: Sunil Mehta (Chief Executive of Indian Banks’ Association).
- Member: Ms Ayesha Martin (Assistant Profession and Associate Head – Design and Analysis Division, IBPS).
- Member: Harideesh Kumar B (Director and Member Secretary, IBPS).
As seen from the above list of members, most of them are the heads of the respective Government and Public Sector Banks, which come under the definition of ‘Public Authority’ and under the definition of ‘State’ under Article 12 of the Constitution of India.
Under the tab of the ‘Organizational Structure,’ the website of IBPS itself mentions that the Governing Board leads it. Therefore, it can be said that IBPS is controlled by the people who are the government members and who draw their salaries/remuneration from the Government. This statement can be rewritten as the government controls IBPS.
Functions of the IBPS
Directly taken from the website of the IBPS:
We help organizations in their personnel selection Activities on Request. We offer our services in the following six areas:
- Recruitment Projects;
- Promotion Projects;
- Admission Test and Certification Projects;
- Assessment Centre Projects;
- Assessment of Group Dynamics Related Personality Traits (Group Exercises);
- Projects where only Registration of Applications was done.
Moving forward, who are the major clients of IBPS? The answer again is in the website itself:
“IBPS provides its service to all Public Sector Banks, SBI, Associate Banks of SBI, RBI, NABARD, SIDBI, few Cooperative Banks, LIC and Insurance which are the regular members of the IBPS society. In addition to that, Regional Rural Banks, many Public Sector Undertakings of Non-financial sectors, Government Departments, State-owned companies also avail its services.”
“During the year 2019-20, a total of 1.45 crore candidates registered for various IBPS Examinations. This itself is an achievement of the Institute. This indicates that more and more candidates are getting attracted to job opportunities in Banking, Insurance, and Financial sectors and directly/ indirectly are showing their confidence in the system of the Online tests conducted by IBPS, which are absolutely fair, transparent, and test of job-relevant skills, aptitudes, and knowledge.”
The function of the IBPS is to conduct recruitments for its clients. Recruitment usually includes conducting preliminary and mains examination and all the incidental and ancillary functions associated with it. The clients collect application fees from the candidates who wish to appear for the examination, and a substantial portion of the same is given to the IBPS, which conducts the recruitment.
Now correlating clients and the number of candidates appearing for the examinations conducted by the IBPS, it can be clearly seen most of the candidates are appearing for the posts in Public Sector Banks, Public Sector Undertakings, Government Departments, State-owned companies. Thus, the major portion of the earning of the IBPS comes from the above-mentioned clients, which come under the definition of ‘State’ as well as ‘Public Authority.’ Therefore, it can be said that the IBPS would not economically survive if its State/government clients stop giving it contracts or stop ‘indirectly funding’ it. So, we can conclude that it is substantially financed indirectly by the government.
The IBPS is controlled by a Governing Body that consists of all the Chief Executive Officers, Heads, Managing Directors of the Public Sector and Government Banks. So, indirectly, it is being controlled by the Government. Contrary parties have argued that there is a differentiation between control and funding by the Public Sector Units and the Government. But for the scheme, purpose, and rationale behind the Act, such interpretation is not proper. For example, according to the contrary arguments, if the Central Government or the State Government passes a law and on the basis of that law, a statutory body is incorporated, then the said body would be a Public Authority. But if that statutory body creates another body, then the latter would not be a Public Authority. This interpretation found itself in Indubala Agarwal v. National Commodity and Derivatives Exchange Ltd.  (CIC). Such narrow interpretation defeats the entire purpose of the Act.
Reason for existence
The website of the IBPS itself states that it was born out of NIBM. The purpose of IBPS was to select ‘Right Man for the Right Job,’ as stated on the website itself. The ‘Right man for the Right job’ motto is stated with connection with persons selected for Public Sector Banks and other Government-owned authorities. This includes the officers and the clerks. Therefore, the IBPS was brought into existence to select qualified persons for the banking business. Banking is a crucial function and is directly responsible for the economic welfare of the country.
Again, IBPS was incorporated to select persons for banking who shall run the Public Sector Banks, which is directly responsible for the country’s economic welfare. Therefore, IBPS does the function which is extremely crucial for the economic welfare of the country. If IBPS did not exist, then the banks and the other government authorities would have to conduct their own examinations. In such a hypothecated situation, the bank or the government authority would be liable to come under the ambit of ‘State,’ and it would be a “Public Authority.” Delegating that crucial work would not make the delegated authority free of all the facets of transparency and fairness.
Violation of the principles of transparency and fairness
IBPS currently enjoys full autonomy and no state regulation at all. It is not amendable its writ jurisdiction, as it states that it does not come under the definition of “State,” and it is also not covered under the Right to Information Act, as it claims not to be a “Public Authority.” It has no accountability and transparency. The website boasts of transparency and fairness, but the attitude is absolutely the opposite. They do not release the question papers, the answer key, the marks obtained, cut-offs, etc. If a person stands rejected in a certain examination, he or she does not know how many marks they had received, the cut-off, the questions, the answers, etc. Everything is concealed. If any person tries to take the information out, they do not reveal it. If a person files an RTI with the respective bank or government authority, it says they do not have the information. There is no remedy at all.
All the major examinations held in India have the provision of providing the question paper, the answer key, a mechanism to challenge the answer key, release of the cut-off, and release of the candidate’s scorecard. The IBPS, in many examinations, does nothing of this sort. This is a blatant violation of transparency and fairness.
Suppose one of the candidates is the son of an influential person who has several contacts in the banking and government sector. Such an influential person uses his contacts and gets his son to give the examination. As there is no transparency in the process itself, his son is selected and becomes an officer in the bank. It is impossible for anyone to know. As said earlier, no data regarding the cut-offs, question papers, answers, marks, etc is released. How can any person expose such corruption? And secondly, what about the deserving candidate who lost the job because the son of the influential person got the post? The present situation breeds corruption, nepotism, and favoritism.
In Cyril Michael and others v. Institute of Banking Personnel Selection (IBPS) [CIC/SM/A/2010/000873], the IBPS was declared to be a public authority. The year was 2012. The decision of the CIC was set aside by the CIC in Ashwani Kumar Avasthi v. IBPS [CIC/DS/A/2011/000802]. It was held that the IBPS is not a public authority under the RTI Act, 2005.
Following was held in Cyril Michael’s case:
- The IBPS has monopoly which is granted by the Department of Financial Services, Ministry of Finance, Government of India on 20th September 2010 to conduct examination at the behest of Public Sector Banks.
- Public Sectors Banks are the banks in which the Government of India holds a majority stake and may be termed as ‘other authorities’ within the meaning of Article 12 of the Constitution of India.
- The Governing body of the IBPS consists of the nominees from the RBI, Ministry of Finance (Government of India), National Institute of Bank Management, representatives of Public Sector Banks, and the Insurance Sector. The matters related to policy and affairs of the Institute are vested in the Governing Body. This leads to the conclusion that the IBPS is an organization controlled by the Government and agencies and instrumentalities of the State falling under the heading “other authorities” within the meaning of Article 12 of the Constitution of India.
- The objective of the RTI Act is to ensure proper information dissemination so that the members of the public are empowered in the decisions that they take and the manner in which they wish to decide how policies should be made by the state, in granting largesse, aid, or finance to such bodies. The IBPS undoubtedly has taken upon itself the job which was hitherto being performed by the Recruitment Boards of the Banks.
- Shri MV Desai, DGM (Admin) wrote to the CIC in his letter dated 4/1/2010 that in his opinion, the citizen has a right to ask for the evaluated scripts and the answer keys based on which he has been evaluated as the recruitment and selection for public employment is a “public function” for which the agency or instrumentality should be accountable.
- In Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi (1975) ILLJ 399 SC, the following was said:
“The combination of State aid and furnishing of an important public service may result in a conclusion that the operation should be classified as State agency. If a given function is of such public importance and so closely related to governmental agency, then even the presence or absence of State financial aid might be irrelevant in making a finding of state action.
It may be a relevant factor……whether the corporation enjoys monopoly status which is state conferred or state protected.
Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this interference of the corporation being an instrumentality or agency of the government.”
7. In Steel Authority of India Limited and Ors v. National Union Water Front Workers and Ors MANU/SC/0515/2001, the following was held by the Supreme Court:
“The phrase any industry carried on under the authority of the Central Government implies an industry which is carried on by virtue of, pursuant to, conferment of, grant of, or delegation of power or permission by the Central Government to a Central Government Company or other Govt. company/undertaking. To put it differently, if there is lack of conferment of power or permission by the Central Government to a government company or undertaking, it would disable such a company/undertaking to carry on the industry in question.”
8. The IBPS has been delegated permission/power by the Central Government to carry out the function of recruitment of Clerks and Officers in the Public Sector Banks, and thus it is fully dependent on the grant of permission by the Central Government. The IBPS has been delegated an exclusive power/permission for conducting Common Recruitment Programme for recruitment of both Clerks and Public Sector Banks on behalf of the Government of India, thus making it an “Agency” which operates only under the authority/control of the Central Government to carry out such recruitment programs in Public Sector Banks. This makes the IBPS a Public Authority within the meaning of Section 2(h)(i) of the RTI Act, 2005.
In Ashwini Kumar Awasthi’s decision, the above judgment was set aside. The following was held:
- IBPS is not controlled by any government. Even though the governing body members are from the Public Sector Banks, they do not interfere in the daily administration of IBPS. They merely guide the IBPS and take policy decisions. Due to this, it can be said that IBPS is not controlled by any government. The reasoning seems completely flawed. “Controlling” does not imply inference on a daily basis. Even making policies that guide the organization to a particular path should be sufficient. The government does not control our day-to-day activities. They only make policies, and people have to follow it. Therefore, in a way, the government exerts plenty of “control” in our life. So, if the governing body makes certain policies, the IBPS would have to follow them.
- IBPS was held to be not a public authority under the Right to Information Act, 2005.
Another judgment is vital from the point of view of transparency in IBPS.
In Kishan Kumar Gupta v. IBPS [CIC/MP/C/2016/000219], the Chief Information Commissioner (CIC) held that the IBPS had conducted the examination on behalf of the Allahabad Bank; therefore, Allahabad bank is the custodian of the information. It was directed by the CIC to furnish the information about the results of the examination to the complainant.
Therefore, from the above judgment, it can be said that even though the IBPS is not a public authority, the bank for which it conducts recruitment has to submit information. The bank would be the custodian of information.
For the sake of transparency and fairness, the IBPS must be designated as a “Public Authority.” Keeping it out of the ambit of the RTI Act is against the principles of the Act itself. Even if it is not designated as a Public Authority, the PSU or the government department which delegates its work to IBPS must be held accountable.
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