The Centre is looking to continue maintaining an arms length in financial sector appointments.
The Centre has proposed setting up a Public Enterprises Selection Board (PESB)-like body for appointment of heads of public sector banks (PSBs), public sector insurance companies (PSICs) as well as financial institutions.
The body, theb Financial Services Institutions Board (FSIB), would have the authority to recommend appointments for PSBs, PSICs and state-owned financial institutions.
The Centre is looking to continue maintaining an arms length in financial sector appointments.
"There is a proposal that is mooted for a common entity, which will give recommendations for all public sector financial institutions," an official said. The Banks Board Bureau (BBB) may be merged or come under the new entity, which may have new members, said another official.
The charter for such an institution would include that the body may give recommendations for appointments to banks, insurance companies and financial institutions, the first official added.
This is part of a restructuring exercise after the Delhi high court passed a judgment setting aside the recommendations made by the BBB for the positions of general managers and directors in PSICs.
The term of BBB chairman Bhanu Pratap Sharma and its three part-time members -- Vedika Bhandarkar, Panja Pradeep Kumar and Pradip Panalal Shah -- ended on April 10.
The government has not yet appointed a new chairman and members or extended the former office-bearers tenure.
The BBB was formed in 2016 as an autonomous recommendatory body with the Centre notifying amendment to the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1980, that provided a legal framework for composition and functions of the BBB.
Its functions included recommending selection and appointment of board of directors of banks.
Also it was to advise the Centre on matters relating to appointments, confirmation or extension of tenure and termination of services of the directors, among others.
It was also asked to help PSBs develop business strategies and capital raising plans. In 2019, BBB's functions were extended to cover appointments of PSICs. But the legality of such appointments made by BBB was challenged in court.
The government would clearly specify the mandate of the new entity to avoid any such ambiguity in future, the official quoted above said. The body may replicate the PESB that was set up to advise the Centre on appointments to top-level posts of PSUs, the official added.
PESB can also give suggestions for any other level positions as specified by the government. The PESB has a chairperson and three members.
The government had roped in Mallika Srinivasan -- the first private sector specialist -- as the chairperson of PESB.
