Recently, the Appointments Committee of the Cabinet (ACC) has approved a government resolution for establishing the Financial Services Institutions Bureau (FSIB).
- FSIB is established in place of the Banks Board Bureau (BBB), to select the chiefs of public sector banks (PSBs) and insurance companies.
- The ACC also approved the appointment of Bhanu Pratap Sharma (former Chairman BBB), as initial Chairperson of FSlB for a 2-year term.
- The Delhi High Court had struck down the BBB’s power to select directors of public sector (PSU) general insurance companies in 2021.
- The government started implementing the verdict by cancelling all appointments of then-serving BBB-selected directors.
- After the verdict, the selection of top officials of PSU insurance companies was put on hold.
New Framework –
- The new framework was proposed by the Department of Financial Services (DFS), Ministry of Finance.
- With the government now clearing the FSIB, the selection process of chiefs of insurance firms is expected to take place soon.
About the Banks Board Bureau –
- It was an autonomous recommendatory body of the Government of India, which started functioning from April 01, 2016.
- Its genesis lies in the recommendations of the P.J. Nayak Committee (2014), whose mandate was to ‘Review Governance of Boards of Banks in India.’
- The amendment to the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1980 provides for the legal framework for composition and functions of the BBB.
- It is tasked to search and select suitable persons for the Board of PSBs, Public Sector Financial Institutions and Public Sector Insurance Companies.
- Following approval from the Finance Ministry, the names recommended by the BBB would be sent to the Appointments Committee of the Cabinet and the Prime Minister’s Office for approval.
- It also recommends measures to improve Corporate Governance in these institutions.
- Mandate –
- To recommend the selection and appointment of Board of Directors in Nationalised Banks, Financial Institutions and Public Sector Insurance Companies.
- To advise the Central Government on matters relating to appointments, confirmation or extension of tenure and termination of services of the Directors of mandated institutions.
- To advise the Central Government on the desired management structure of mandated institutions, at the level of Board of Directors and senior management.
- Development programs for managerial personnel in mandated institutions, etc.
- Any other work assigned by the Government in consultation with the Reserve Bank of India (RBI).