What is the Financial Services Institutions Board (FSIB)?
It is a government agency created under the aegis of the Ministry of Financial Services. The board will be responsible for making recommendations for the appointment of full-time directors and the non-executive chairman of state-run financial services institutions. It would also issue guidelines for the selection of general managers and directors of public sector general insurance companies. Although its main task is to act as a headhunter for public financial services entities, the council will also be involved in the formulation and development of business strategies for public banks and will assist them in their fundraising plans. .
Why did it replace the Banks Board Bureau (BBB)?
The BBB was declared incompetent authority last year by the Delhi High Court when a managing director of the national insurance company challenged the appointment of a subordinate of his selected for the post of director by the BBB . As a result of the order, nearly 10 to 11 BBB-appointed directors had to leave their posts. To end this stalemate, the BBB had to be abolished and a new body, namely the FSIB, had to be set up subject to the approval of the Cabinet Appointments Committee, headed by the Prime Minister.
What is the mandate of the FSIB?
The primary role of the FSIB is to identify workforce capabilities and ensure proper selection of talent for management positions in government-owned financial institutions. However, when the BBB came into effect in April 2016, it was envisioned as a body that would effectively transform and operate government entities as private actors, but did not make much progress on this front. With FSIB, the intention is to go beyond the man-manager role and to help the government formulate a code of conduct and ethics for the full-time administrators of these entities. It would also monitor and assess the performance of public sector banks, public financial institutions and insurance companies.
How were senior banking officials appointed before BBB?
Promotions and recruitments were made at the whim and at the mercy of the government. The BBB and now the FSIB aim to prevent such rep-tape practices and promote people based on their meritocracies.
How important is the role of the FSIB?
When BBB came into action, there was consolidation within public sector banks, first with Bank of Baroda in 2018 and then a year later with 10 PSU banks. Again, there could be another round of bank mergers and privatization of banks and insurance companies. The criticism that often surfaces is whether PSU entities are ready enough to stand the test of privatization from an operational and management perspective, and both have a deep connection to labor efficiency. -work at all levels. Therefore, the silent mandate of the FSIB would be to prepare banks and insurance companies for the privatization process and to undertake the necessary human resource clean-up/improvement practices.
Who leads the new entity and who are its members?
The FSIB would be led by its president, a candidate from the central government. The council would include the secretaries of the DFS, the chairman of IRDAI and a deputy governor of the RBI. In addition, it will have three part-time members who are experts in the banking field and three others from the insurance sector. At present, Bhanu Pratap Sharma, the Chairman of BBB is the Chairman of FSIB. Animesh Chauhan, former Chairman and Managing Director of Oriental Bank of Commerce, Shailendra Bhandari, former Managing Director and CEO of ING Vysya Bank and Deepak Singhal, former Managing Director of RBI were appointed as part-time members.