New Delhi, Feb 28 (IANS): Former comptroller and auditor general Vinod Rai has been named the first chairman of the Banks Board Bureau that will give advice on how to recover the bad loans of state-run banks.

In a statement, Finance Minister Arun Jaitley said Prime Minister Narendra Modi has approved the proposal from the department of financial services for the constitution of the bureau with chairman and members for two years.

The members co-opted to the board are Anil K. Khandelwal, former chair of Bank of Baroda, H.N. Sinor, former joint managing director of ICICI Bank and Rupa Kudwa, former managiig director and chief executive of Crisil.

Rai was the chair of India's official audit agency when a spate of alleged financial irregularities came to fore during the tenure of Prime Minister Manmohan Singh's government, notably in telecom and coal space.

Sunday's announcement comes a year after Jaitley had said in his last budget speech that an autonomous bureau will be set up to improve the governance of India's state-run banks.

"The Bureau will search and select heads of public sector banks and help them in developing differentiated strategies and capital raising plans through innovative financial methods and instruments," Jaitley has said.

"This would be an interim step towards establishing a holding and investment company for banks," he had said.

The situation now has caused much concern since the quantum of exposure of Indian scheduled banks in terms of gross non-productive assets, re-cast loans and write-offs was Rs.9.5 lakh crore as of September last year.