It’s a government body set up under the Department of Financial Services. The board will be entrusted with making recommendations for the appointment of full-time directors and non-executive chairman of state-run financial services institutions.
It would also issue guidelines for selecting general managers and directors of public sector general insurance companies. While its main task is to play the role of head-hunter for the state-owned financial services entities, the board will also be involved in formulating and developing business strategies for state-run banks and help them in their fund-raising plans.
The BBB was declared an incompetent authority last year by the 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 the BBB. Consequent to the order, 10–11 directors appointed by the BBB had to vacate office.
To end this logjam, the BBB had to be struck down and a new body, namely, FSIB had to be put in place vide approval from the Appointments Committee of the Cabinet, headed by the prime minister.
The primary role of FSIB is to identify manpower capabilities and ensure proper selection of talent for senior positions at financial institutions owned by the government. However, when BBB was brought into force in April 2016, it was envisaged as a body that would efficiently corporatise and make government entities function like private players, but it didn’t make much headway on that front.
With FSIB, the intent is to go beyond the man-manager role and assist the government in formulating a code of conduct and ethics for whole-time directors in these entities. It would also monitor and assess the performance of public sector banks, government-owned financial institutions and insurance companies.
Promotions and recruitments happened at the will and mercy of the government. The BBB, and now the FSIB, aim to prevent such red-tape and promote people based on merit.
When BBB was brought 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 privatisation of both banks and insurance companies.
The criticism often surfacing is whether PSU entities are ready to withstand the test of privatisation from an operations and management perspective — and this has a deep nexus with the efficiencies of manpower at all layers. Therefore, the silent mandate of FSIB would be to ready banks and insurance companies for the privatisation process and undertake the necessary clean-up/HR upliftment practices.
FSIB would be headed by a chairman, a central government nominee. The board would comprise the Secretaries of the DFS, the chairman of IRDAI, and a deputy governor of the RBI. Additionally, it will have three part-time members who are experts in banking and three more 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 MD and CEO of ING Vysya Bank, and Deepak Singhal, former ED, RBI, have been appointed as part-time members.