Financial Services Institutions Bureau (FSIB)

Syllabus: General Studies Paper 3

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

Financial Services Institutions Bureau

Aim:

• It will make recommendations for appointments of full-time directors as well as the non-executive chairman of banks and financial institutions.
• Issues guidelines to select general managers and directors of public sector general insurance companies.

Amendment required:

• The Appointments Committee of the Cabinet (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

 Why the need for revamping:-

• Delhi HC order: 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. Thus, the need for an overhaul.
• Slow Recruitment Process: Despite the BBB’s good work, recruitment to a higher level has been slow. Also, BBB’s extended two-year term ended, and new recruitment can restart only when a new body is in place.

About BBB:

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.

Composition:

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.