Parliament passed the IIM (Amendment) Bill 2023

Parliament has approved the IIM (Amendment) Bill 2023. The bill was passed in the Rajya Sabha on 8 August. The Lok Sabha has passed it on 4 August 2023.

The Bill proposes to amend the Indian Institutes of Management Act, 2017.

• The Act declares the Indian Institutes of Management (IIMs) as institutions of national importance and regulates their functioning. IIMs provide post graduate education in management and allied fields.

• Under the new Act, the IIM director will be appointed by the Board of Governors based on the recommendations of the selection committee. The Board of Governors will have to take the approval of the Visitor before appointing the Director of the Institute.

• The Bill designates the President of India as the visitor to each of the institutions covered under the Act.

Appointment and removal of IIM directors:

• Under the Act, the director of an IIM will be appointed by the Board of Governors, based on the recommendations of a search-cum-selection committee.

• The Bill mandates the Board to obtain the prior approval of the Visitor before appointing the Director of the Institute.

• The procedure for the selection of the Director shall be prescribed by the Central Government. Under the Act, the Search Committee consists of the Chairman of the Board and three members from amongst eminent administrators, industrialists, academicians. This Bill reduces these three members to two, and adds one more member nominated by the Visitor.

• Under the Act, the Board may remove a director from office on the following grounds:

  • Bankruptcy,

  • Mental and Physical Disabilities,

  • Conflicts of Interest.

• As per the Bill, prior approval of the Visitor will be required by the Board before removal of the Director. The Bill also empowers the Visitor to terminate the services of the Director.

Appointment of the Chairman of the Board of Governors:

• Under the Act, the chairperson of the Board of Governors of each institution is appointed by the Board. The Bill amends this and provides that the Chairman of the Board shall be nominated by the Visitor.

Investigation against IIM:

• The Act empowers the Board to initiate an inquiry against any institution if it is not functioning as per the Act. A retired High Court judge conducts such an inquiry.

• Based on its findings, the Board may take such action as it may deem fit.

Dissolution of the Board:

• The Bill provides that the Central Government may prescribe the conditions and procedure for the dissolution or suspension of the board of any institution. If a Board is suspended or dissolved, the Central Government shall constitute an Interim Board for a period of six months or till a new Board is constituted.

Coordination Forum: 

• The Act provides for a coordination forum for all institutions. The President of the Forum is selected by a Search-cum-Selection Committee constituted by the Forum.

• The Bill has been amended to provide that the Speaker shall be nominated by the Visitor.

• Under the Act, the Forum also consists of the chairpersons of the four institutes on a rotation basis for two years. These four chairpersons are nominated by the President of the Forum. It has been amended in the bill that the presidents of all the institutions will be ex-officio members of the forum.

Incorporation of Institutions:

• The Act provides that when an existing institution is converted into an IIM under this Act, every employee of such institution shall retain the same tenure, salary, pension as before. The Bill excludes the directors of such institutions from this provision.

• The Bill classifies the National Institute of Industrial Engineering (NITIE), Mumbai as IIM, Mumbai.