Central Government has recently decided to replace Banks Board Bureau (BBB) with Financial Services institutions Bureau (FSIB) for recommending persons for appointment of financial services institutions.
Background of Bank Board Bureau
- Banks Board Bureau (BBB) was set up in 2016 as a non-statutory body to recommend names of whole time Directors (WTDs) and non-executive Chairman (NEC) of Nationalised Banks, Public sector Insurance Companies and selected financial institutions such as EXIM Bank, SIDBI, NHB, NABARD, IIFCL and IFCI.
- Last year, BBB was declared an incompetent authority by Delhi High Court, when a general manager at state-owned National Insurance Company challenged the appointment of a person junior to him for Director’s position by BBB. Consequently, 10–11 directors appointed by BBB had to vacate office.
- To end this logjam, BBB had to be struck down and a new body, namely, FSIB had to be put in place.
About Financial Services Institutions Board
- Establishment of FSIB: Set up under the Department of Financial Services, Ministry of Finance
- Is FSIB a statutory body? No, since it has not been set up through an act of the Parliament.
- Composition: 11 Members (All Members including Chairman are part time members)
- Chairperson
- 4 Ex-officio persons: Secretary, Department Financial Services + Secretary, Department of Public Enterprises + Deputy Governor, Reserve Bank of India + Chairperson of the Insurance Regulatory and Development Authority of India (IRDAI)
- 3 Expert Members in field of Banking and Financial Institutions
- 3 Expert Members in the field of Insurance.
- Functions:
- Recommend persons for appointment as whole-time directors (WTDs) and non-executive chairpersons (NECs) on Boards of Directors in Public Sector Banks (PSBs), Public Sector insurance companies (PSIs) and selected financial institutions such as NABARD, NHB, SIDBI, EXIM, IFCI, IIFCL etc.
- Advise Government on matters relating to appointments, transfer, or extension of term of office and termination of services of the said directors.
- Advise Government on desired management structure at Board level for PSBs, FIs and PSIs.
- Advise Government on a suitable performance appraisal system.
- Build a databank containing data related to performance of PSBs, FIs and PSIs.
- Advise Government on formulation and enforcement of code of conduct and ethics for whole-time directors in PSBs, FIs and PSIs.
- Advise Government on evolving suitable training & development programs for management personnel in PSBs, FIs and PSIs.
- To help PSBs, Fls and PSIs in terms of developing business strategies & capital raising plan etc.
- Methodology for making recommendations: FSlB shall develop an appropriate methodology to search and recommend high-calibre persons for appointment as WTDs and NECs