In News
- Recently, the government has transformed the Banks Board Bureau (BBB) into Financial Services Institutions Bureau (FSIB) by making some amendments.Â
Major changes
- Guidelines for selection of general managers and directors of public sector general insurance companies have been made part of FSIB.
- Modifications in the Nationalised Banks (Management and Miscellaneous Provisions) Scheme of 1970/1980: for establishing FSIB as a single entity for making recommendations for appointments of whole time directors and non-executive chairman of banks and financial institutions.
- The union finance ministry is planning to identify new members, restructure the bureau, and recommend new names to the Appointments Committee of the Cabinet (ACC).
- After revamp, the board will be able to recommend full-time appointments at financial institutions, where currently the executives are given additional roles through interim arrangements.
Issues/ Need behind the moveÂ
- Not a competent body: The amendments were required as the Delhi High Court in its order said the BBB is not a competent body to select the general managers and directors of state-owned general insurers.
- Subsequently, at least half a dozen newly-appointed directors of non-life insurers had to vacate their positions.
- There is also a case pending in the Delhi HC, where a PSU insurer executive has challenged the appointment of the chairman and managing director of United India Insurance selected by BBB.Â
- Amid these issues, appointments by the BBB have been suspended.
- The BBB is now practically non-functional.d
- Therefore, the government is looking to expand the body and to rename it and give it a fresh mandate for appointments.
- The move aims to empower the body to recommend people for public sector insurers and fasten hiring at the top level of state-owned financial institutions.
Banks Board Bureau (BBB)Â
- An autonomous body of GOI based on the recommendations of the RBI-appointed Nayak Committee.
- It was set up in 2016 by the government with the aim to select executive directors and managing directors and chief executives of PSBs and financial institutions.Â
- The Ministry of Finance takes the final decision on the appointments in consultation with the Prime Minister’s Office.
- It is committed to improving the Governance and Boards of public sector financial institutions.Â
- The permanent member or ex-officio members of BBB are Department of Financial Services Secretary, Department of Public Enterprises Secretary and a Deputy Governor of RBI.Â
Functions of BBB
- To recommend the selection and appointment of Board of Directors in Mandated Institutions (Whole Time Directors and Chairman).
- 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;
- To advise the Central Government on a suitable performance appraisal system for mandated institutions;
- To build a data bank containing data relating to the performance of mandated institutions and its officers;
- To advise the Central Government on the formulation and enforcement of a code of conduct and ethics for managerial personnel in mandated institutions.
- To advise the Central Government on evolving suitable training and development programs for managerial personnel in mandated institutions.
- To help the banks in terms of developing business strategies and capital raising plan and the like;
- Any other work assigned by the Government in consultation with the Reserve Bank of India.
Way Forward
- Improve Corporate Governance: Search and Select personages for Board of Public Sector Banks, Public Sector Financial Institutions and Public Sector Insurance Companies and recommend measures to improve Corporate Governance in these Institutions.Â
Source: TH
