Financial Services Institutions Bureau: FSIB to be much more than just a headhunter

The Financial Services Institutions Bureau (FSIB), which will replace the Banks Board Bureau (BBB), will be much more than a mere headhunter to fill in key posts at state-run banks, insurers and other financial institutions (FIs). According to an official order, reviewed by FE, the FSIB will advise the government on a suitable performance appraisal system for whole-time directors and non-executive chairmen of the state-run financial services institutions. It will build a data bank relating to the performance of public-sector banks (PSBs), FIs and insurance companies.

It will advise the government on “formulation and enforcement of a code of conduct and ethics for whole-time directors” in these institutions. The FSIB will even help these state-run banks, FIs and insurers in developing business strategies and capital raising plans, etc. These functions will be in addition to its role in recommending candidates for appointment as whole-time directors and non-executive chairpersons of public-sector banks (PSBs), financial institutions and public-sector insurers (PSI).

The FSIB will comprise a chairperson nominated by the central government; the secretaries of the departments of financial services and public enterprises; the chairman of the Insurance Regulatory and Development Authority of India; and 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, according to the order. Former BBB chairman Bhanu Pratap Sharma has been selected to head the FSIB for two years or until further orders.

Sharma was at the helm of the BBB since 2018 until his term ended in April 2022. The government has also appointed three part-time members of the new entity (FSIB) who will be looking after affairs relating to PSBs and FIs–Animesh Chauhan, former chairman and managing director of Oriental Bank of Commerce; Shailendra Bhandari, former managing director and chief executive of ING Vysya Bank; and former Reserve Bank of India executive director Deepak Singhal. Similarly, the government has decided to appoint three more part-time members to handle affairs relating to insurance—Usha Sangwan, former managing director of LIC; AV Girija Kumar, former CMD of Oriental Insurance and Sujay Banarji, former whole-time director of IRDAI.

In future, the FSIB chairman and the three members handling affairs relating to banking and financial institutions will be selected by a search committee that will comprise the governor of the Reserve Bank of India (RBI) and the secretaries of the departments of financial services and personnel and training (or such other secretary as may be approved for this purpose by the Appointments Committee of the Cabinet). Similarly, the part-time members relating to the insurance sector would be chosen by the chairman of the IRDAI and the secretaries of the departments of financial services and personnel and training. “To avoid conflict of interest, the part-time members shall be either retired or, if working, be required to discontinue work.

Further, such members shall have no commercial relationship with any commercial entity that has commercial relationship with any PSB or FI or PSI, and the central government may consult the regulator concerned in this regard,” according to an order by the department of financial services. The FSIB chairperson and part-time members will get a fee of Rs 50,000 per sitting. “FSIB shall be a professional body with autonomy in its affairs and shall have its own secretariat.

It may appoint a person, or take on deputation from RBI a person in the rank of chief general manager or general manager in RBI, to act as full-time secretary of its secretariat,” the DFS said. .