Recently, the Appointments Committee of the Cabinet (ACC) has approved a government resolution for establishing the Financial Services Institutions Bureau (FSIB).
Details –
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.
Background –
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).
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