The new framework was proposed by the Department of Financial Service, Ministry of Finance.
What is the 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 Banks Board Bureau (BBB) has its genesis in the recommendations of ‘The Committee to Review Governance of Boards of Banks in India, May 2014 (Chairman - P. J. Nayak)’.
The government, in 2016, approved the constitution of the BBB to make recommendations for 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 has the final decision-making authority on the appointments in consultation with the Prime Minister’s Office.
Apart from recommending personnel for the PSBs, the Bureau had also been assigned with the task of recommending personnel for appointment as directors in government-owned insurance companies.
It was also entrusted with the task of engaging with the board of directors of all PSBs to formulate appropriate strategies for their growth and development.
Delhi High Court had struck down the BBB’s power to select directors of Public Sector Undertaking, general insurance companies and the government has already implemented the verdict by cancelling all the appointments of the then serving directors who were selected by the BBB.
Delhi High Court in 2020 ruled that the BBB couldn’t select the general managers and directors of state-run general insurers, as it was not a competent body.
New India Assurance, the country’s largest general insurer, has been functioning without a regular CMD for almost 100 days.