Financial Services Institutions Bureau: What Is It?

Financial Services Institutions Bureau: What Is It?


The Bank Board Bureau (BBB) has been replaced with the Financial Services Institutions Bureau under the Department of Financial Service's new architecture (FSIB). In India, there are numerous institutions that provide financial services. Some examples of financial institutions include banks and insurance companies.
Financial Services Institutions Bureau (FSIB) appoints the top positions in Indian financial services organizations, such as directors and chairpersons.

What Is FSIB?

The Financial Services Institutions Bureau has been established by the Central Government with effect as of July 1, 2022. The FSIB's role is to suggest candidates for positions on the boards of financial services organizations as full-time directors and non-executive chairpersons.
Together with the duties of appointment, advice will be given on a range of other topics relevant to personnel management in these organizations. It would also release rules for choosing the directors and general managers of general insurance firms operating in the public sector. The board's main responsibility is to assist state-run banks in hiring new workers, but it will also assist them in creating business plans and business strategies.
The selection of Bhanu Pratap Sharma, the previous chairman of BBB, as the first chairwoman of the FSIB for a period of two years has been authorized by the ACC.
Financial Services Institutions Bureau: What Is It?

The FSIB'S Mission And Vision:

Look for and choose the best individuals for the boards of public sector banks, financial institutions, and insurance companies. Also to make suggestions for strengthening the corporate governance of these organizations.
To encourage financial companies servicing the public sector to use the strongest corporate governance principles.

Activities of FSIB:

•    To suggest candidates for Whole-Time Directors (WTDs) and Non-Executive Chairperson (NECs) appointments to the Boards of Directors of Public Sector Banks (PSB), Financial Institutions (FI), and Public Sector Insurers (PSI).
•    To give the government advice on issues including the aforementioned directors' nominations, transfers, term extensions, and termination of services.
•    To counsel the government on the ideal board-level management structure for PSBs, FIs, and PSIs.
•    To advise the government on a system that is efficient for WTDs and NECs in PSBs, FIs, and PSIs.
•    To compile data on PSB, FI, and PSI performance into a database.
•    To advise the government on the development and application of an ethics and behavior code for directors who work full-time in PSBs, FIs, and PSIs.
•    To provide guidance to the government regarding the creation of appropriate management training and development programs for PSB, FL, and PSI staff.
•    Among other things, to assist PSBs, FIs, and PSIs in developing business plans and capital raising plans.
•    After consultation with the appropriate regulator for that bank, financial institution, or insurer, to carry out such a process and establish a panel for the competent authority's consideration for any subsequent bank, financial institution, or insurer to whom the Government makes a reference.

Financial Services Institutions Bureau's Organizational Structure:

The FSIB is made up of members and a chairperson.


•    The Central Government is responsible for appointing the FSIB Chairperson. He must be a seasoned businessperson with significant knowledge of the financial sector, a retired official from the banking industry or a regulatory body, or someone with at least 25 years of experience in public administration who has worked in the banking and financial sectors.

Members (ex-officio)

•    The Secretary In charge of the Department of Financial Services 
•    The Chairperson of the Insurance Regulatory and Development Authority of India (IRDAI), or, if the Chairperson position is empty, the senior-most full-time member of IRDAI 
•    The Secretary in charge of the Department of Public Enterprises
•    A Reserve Bank of India (RBI) deputy governor

Members (part-time, non-government) 

•    The federal government is to propose the names of three individuals who have expertise in PSBs and FIs.

Why Do Financial Services Institutions Require A Bureau?

The revisions were required by the Delhi High Court's decision from the previous year that the BBB is ineligible to choose the general managers and directors of state-owned general insurers.
The Department of Financial Services has been requested by the Appointments Committee of the Cabinet (ACC) to notify the government resolution for creating the FSIB as a single entity to make recommendations for the appointments of full-time directors and non-executive chairman of banks and financial institutions, and to make the necessary changes to the Nationalized Banks (Management and Miscellaneous Provisions) Scheme of 1970/1980 with the approval of the Finance Minister.
Financial Services Institutions Bureau: What Is It?

Key Terms Related To FSIB:

Public Sector Banks (PSBs) 

The term "public sector bank" is used to describe and include:
•    Each new bank founded under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1955, or the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, as well as any other bank to which the government may provide notice that the FSIB shall carry out the functions specified in such notice.

Financial Institutions (FIs) 

Financial institutions consist of:
1.    A number of lending institutions, including the National Bank for Agriculture and Rural Development (NABARD), which was established by the National Bank for Agriculture and Rural Development Act of 1981
2.    the National Housing Bank, which was established by the National Housing Bank Act of 1987
3.    the Exim Bank of the Export-Import Bank of India, which was established by the Export-Import Bank of India Act, 1981
4.    the Small Industries Development Bank of India, which was established by the Small Industries Development Bank of India Act, 1989
5.    IFCI Limited

Public sector insurer (PSI) 

PSIs consist of:
•    The General Insurance Corporation of India (GICI), established under section 9 of the General Insurance Business (Nationalization) Act, 1972, the Life Insurance Corporation of India (LIC), every acquiring company as defined in section 3 of the said Act, as well as the Agriculture Insurance Company of India Limited.

Bank Board Bureau (BBB)

•    It was a stand-alone organization of the Indian government tasked with selecting qualified individuals for PSB, public sector financial institution, and public sector insurance company boards and with giving suggestions for enhancing the corporate governance of these organizations.
•    The BBB was initially established in 2016 to select the CEOs and Executive Directors of public sector banks.
•    The Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1980 was updated in 2016, and the Central Government's 2016 announcement established the legal foundation for the structure and operations of the BBB.
•    Following that, the government delegated to BBB the duty of selecting the leaders of insurance companies.
•    The BBB is advancing the governance improvements in PSBs that were suggested by the PJ Nayak Committee.
•    The Delhi High Court deemed the Banking Board Bureau (BBB) incompetent and revoked its authority after determining that the selection procedure was flawed.
•    The FSIB has now received official government approval, paving the way for the hiring of insurance company executives.

Any suggestions or correction in this article - please click here ([email protected])

Related Posts: