Bank Board Bureau (BBB) and Financial Services Institutions Bureau (FSIB)

In 2021, the Delhi High court issued an order that the Bank Board Bureau (BBB) is incompetent to select Directors and General Managers of state-owned General insurers. In fact, due to this decision, half a dozen newly appointed Directors of insurers had left their position. Identification of workforce capabilities and proper talent selection for top posts at financial institutions owned by the government are the primary responsibilities of the FSIB. BBB was intended to effectively corporatize government agencies and make them operate like private players when it was implemented in April 2016. Still, it didn’t make much progress in that direction. 

Bank Board Bureau (BBB): Objectives, Structure, and Features

Bank Board Bureau was launched in April 2016 under the seven-point strategy of the Indradhanush Mission to overhaul Public sector Banks. Central Government non-profit autonomous body with financial support from the Reserve Bank of India.

It comprised the Chairman, three ex-official members, i.e., the Secretary, the Department of Public Enterprises, the Secretary of the Department of Financial Services, and the Deputy Governor of the Reserve Bank of India. And also five expert professionals from the industry, two of them used to be from the private sector.

The overall functioning of the Bank Board Bureau Involved:

• Aid in the restructuring of the public bank sector business strategies
• Provide support to deal with issues of bad loans or stressed assets
• Build Strategies along with banks for raising capital funds 
• Advise the Central Government on crucial matters such as:

     – Top-level appointments like full-time Directors, and non-Executive Chairman in PSBs.

   – Advise the Government on matters relating to appointments, confirmation or extension of tenure and termination of services of the Directors of nationalised banks.

     – Assist the Central in formulating a code of conduct and ethics for managerial personnel in nationalised banks.

     – And evolve suitable training and development programs for managerial personnel in a nationalised bank.

The initiative to form the Financial Services Institutions Bureau (FSIB) started when a general manager at the state-owned National Insurance Company complained that the BBB had appointed somebody junior to him to the Director’s position. After that, the Appointment Committee of the Cabinet, which the Prime Minister heads, asked the Department of Financial Services (DFS) to introduce the required changes in Nationalised banks (Management and Miscellaneous Provisions) Scheme of 1970/80. 
Finally, in 2022 Central Government, under the Prime Ministership of Narendra Modi, approved and decided to set up Financial Services Institutions Bureau (FSIB) as a single entity. It will be a professional body with autonomy in its area and shall have its secretariat. 

Roles of Financial Services Institutions Bureau (FSIB):

Following are the roles of the Financial Services Institutions Bureau

• Recommend a person for appointments of Wholetime Directors (WTDs) and a non-Executive Chairperson (NEC) in public sector banks (PSBs), public sector insurers (PSIs), and financial institutions (FIs).
• Recommendation for Selection of General Managers and Directors in non-life PSIs.
• Advise the Government on matters relating to appointments, transfer or extension of the term of office, and termination of services of the appointed directors.
• Also, help the Government with a suitable performance appraisal system for WTDs and NECs. 
• Formulation and Enforcement of a code of conduct and Ethics for appointed personnel.
• Layout with the Government the desired management structure at the Board level for all the financial institutions.
• Build and maintain data bank related to the performance of the financial institutions.
• Develop suitable training and development programs for all the management personnel in financial service institutions.
• Assist in developing business strategies and capital raising plans etc.

Composition of Financial Services Institutions Bureau (FSIB):

Financial Services Institutions Bureau (FSIB) consists of:

• The Central government appoints a chairperson.
• Secretaries of the departments of financial services and public enterprises.
• The chairman of the Insurance Regulatory and Development Authority of India.
• A Deputy governor of the Reserve Bank of India (RBI).
• Apart from them, there will be three members with knowledge of banks and other financial institutions and three more with knowledge of insurance.
• The selection of the FSIB chairman and the three members will be conducted by a search committee comprising the RBI governor and the secretaries of financial services departments, personnel and training.
• The Government has also approved the appointment of three part-time, non-government members for issues related to PSBs and FI for the Financial Services Institutions Bureau (FSIB).
             – Currently in the ex-banker from the public sector category, Animesh Chauhan, former Chairman and Managing Director of Oriental Bank of Commerce, is appointed as a Member of FSIB.
             – While from the Private Sector category Shailendra Bhandari, former Managing Director & CEO of ING Vysya Bank, has been appointed as a Member of FSIB.
             – And Deepak Singhal, former Reserve Bank of India executive director 
• A fee of Rs 50000/- per sitting will be paid to the Chairperson and the Part-time Members.
• Former Banks Board Bureau (BBB) Chairman Bhanu Pratap Sharma will be heading FSIB for two years.  

Thus, it ended the Banks Board Bureau (BBB), which was formed on April 1, 2016, as an autonomous body for the Board of Public Sector Banks, Public Sector Financial Institutions, and Public Sector Insurance Companies. It was also formulated by the Prime Minister to devise appropriate strategies for recruitment, growth, and development for the board of directors of all PSBs.
Largely the Government reconstituted Banks Board Bureau (BBB) into Financial Services Institutions Bureau (FSIB) through modifications in the structure and processes.
Hopefully, with the new amendments, we will experience improved regulations, systems, workforce, data insights, and more responsible and higher-level fundamental roles.