Why in the News?
The appointment committee of the Cabinet has approved a government resolution for establishing the Financial service institution Bureau in place of the Bank Board Bureau.
- To Nationalize the banks in the 1970s and 80s, Govt. of India brought in an act called "The Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 and 1980.
- Under the provisions of this Act, Govt. has made a scheme called, "Nationalized Banks (Management & Miscellaneous Provisions) Scheme, 1970 & 1980" which had provisions related to Directors but this was only for "Banks
- The BBB was originally set up in 2016 to select top officials and Directors of Public sector banks. Later, the government entrusted BBB to select the chiefs/Directors of insurance companies as well.
- It is an autonomous recommendatory body of the Government of India, which started functioning on April 1, 2016.
- It is tasked to search and select suitable persons for the Board of PSBs, public sector financial Institutions and Public Sector Insurance Companies
New Guidelines and Framework
- Government has implemented the verdict by cancelling all the appointments of the then-serving directors who were selected by BBB.
- The DFS shall make modifications required in Nationalised banks scheme of 1970/80 with approval of the Finance Minister then notify government resolution for the establishment of FSIB for making appointments of WTD (Whole-time Director) and NEC (Non-Executive Chairman) in PSBs, PSIs and FIs.
Need of FSIB
- Bhanu Pratap Sharma, former chairman, BBB, is appointed chairperson of FSIB by ACC for a term of 2 years.
- 'Banks Board Bureau, the name represents banks but it appoints chiefs/directors of all financial public sector entities including banks and non-banks (insurance etc.). That is why "Financial Services Institutions Bureau (FSIB)" would.
- Delhi High Court said last year, “BBB is not the competent body to select the general managers and directors of State-owned general insurers.
- Clearance of FSIB by the government will start the selection process of Chiefs of Insurance Firms in the upcoming weeks.
- To maintain constant growth of market share by ensuring quality attributes.
- To ensure ethics and transparency at all levels.
- Contribute to the socio-economic development and growth of the country.