Financial Services Institutions Bureau

Financial Services Institutions Bureau

Subject : Economy

Context:

A notification was issued to amend the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970.

Details:

• The present norms prescribe appointment for three years or till the age of 60 years, whichever is earlier–for the Managing Director and other whole-time directors of the public sector banks.
• The appointment can now be made initially for up to 5 years, which can be extended for the same number of years. Thus, the Central Government may, after consultation with the Reserve Bank, reappoint the Managing Director and other whole-time directors of the public sector banks.

Concept:

• Financial Services Institutions Bureau (FSIB) is responsible for the selection and appointment of the Board of Directors in Public Sector Banks, MD and CEO and Financial institutions.
• The Ministry of Finance takes the final decision on the appointments in consultation with the Prime Minister’s Office.
• The Government appoints Managing Directors from Whole-time Directors (WTD) of a public sector banks after vigilance clearance, etc.
  • The Names of these WTDs are recommended by the Financial Services Institutions Bureau (FSIB).
• A MD and CEO has key responsibilities and duties—required to establish vision, mission and values in consultation with the Board of Directors,  to set strategy and structure,  to monitor and control and to exercise accountability to shareholders and responsibility towards the stakeholders.

Mandates of Financial Services Institutions Bureau (Earlier Bank Bureau of India):

• FSIB is the single entity for making recommendations for appointments of whole time directors (WTDs) and non­executive chairpersons (NEC) at public sector banks (PSBs), public sector insurers (PSI) and financial institutions (FIs).
• It also advises the government on extension of terms and even termination of services of WTDs and NECs at the financial services institutions.
• The FSIB also recommends a performance appraisal system for WTDs and NECs at PSBs, FIs and PSIs
• FSIB  also advises the government on formulation and enforcement of a code of conduct and ethics for WTDs and NECs.
• It builds a database on the performance of PSBs, FIs and PSIs.
• The FSIB helps PSBs, FIs and PSIs develop business strategies and capital raising plans.
• The FSIB advises the government on the desired management structure at PSBs, FIs and PSIs.
• It  also advises the government on evolving training and development programmes for management personnel in PSBs, FIs and PSIs.