Why in news? The Financial Services Institutions Bureau (FSIB), recommended names for the posts of managing directors of Bank of Baroda and Bank of India

Highlights

• The final decision on the FSIB recommendation would be taken by the Appointments Committee of the Cabinet headed by Prime Minister Narendra Modi

What is Financial Services Institutions Bureau (FSIB)?

• It’s a government body set up under the Department of Financial Services.
• The board will be entrusted for
  • Recommendations for the appointment of full-time directors and non-executive chairman of state-run financial services institutions.
  • Issuing guidelines for selecting general managers and directors of public sector general insurance
• The board will also be involved in formulating and developing business strategies for state-run banks and help them in their fund-raising plans

Why has it replaced Banks Board Bureau (BBB)?

• It was declared as 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.
• 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.

How were senior bank officials appointed before BBB?

• Promotions and recruitments happened at the will and mercy of the government.
• FSIB, aim to prevent such red-tape and promote people based on merit.

Who heads the new entity, and who are its members?

• It 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 experts in banking and three more from the insurance sector.