Financial Services Institutions Bureau

Financial Services Institutions Bureau

News: The government has transformed Banks Board Bureau (BBB) into Financial Services Institutions Bureau (FSIB) by making some amendments.

What is BBB and its Composition?
• It was set up in February 2016 as an autonomous body based on the recommendations of the RBI- appointed Nayak Committee.
• It was part of the Indradhanush Plan.
• It will make recommendations for the appointment of whole-time directors as well as non-executive chairpersons of Public Sector Banks (PSBs) and state-owned financial institutions.
• The Ministry of Finance takes the final decision on the appointments in consultation with the Prime Minister’s Office.
• Banks Board Bureau comprises the Chairman, three ex-officio members i.e Secretary, Department of Public Enterprises, Secretary of the Department of Financial Services and Deputy Governor of the Reserve Bank of India, and five expert members, two of which are from the private sector.

What is Financial Services Institutions Bureau?
• The Financial Services Institutions Bureau will select the chiefs of public sector banks and insurance companies.
• The FSIB will have the clear mandate to issue guidelines and select general managers and directors of state-run non-life insurers, general insurers and Financial Institutions.
• FSIB will be the single entity for making recommendations for appointments of WTD (Whole-time Director) and NEC (Non-executive Chairman) in Public Sector Banks, India Private Limited company and Financial Institutions.
• The Appointments Committee of Cabinet (ACC) has approved the appointment of Bhanu Pratap Sharma as Initial chairperson of FSIB for two years. He was the former Chairman of BBB.
• The ACC has asked the Department of Financial Services to carry out necessary modifications in the Nationalized Banks (Management and Miscellaneous Provisions) Scheme of 1970/1980 with the approval of the Finance Minister, and then notify the government resolution for establishing FSIB as a single entity

What was the need for an overhaul?
• Delhi high court last year observed that the bureau was not a competent body to recommend appointments at PSU general insurers, and held that circulars enabling BBB to select general managers and directors of PSU insurers were not legally valid.
• Despite the BBB’s good work, recruitment to a higher level has been slow. Also, BBB’s extended two-year term ended, and new recruitments can restart only when a new body is in place.