Govt looking at new selection body for PSU financial entities

The government is looking to set up a new body, Financial Institution Bureau, for the selection of key executives in state-owned insurance companies and other state-run financial institutions, and guide them to make business and human resource (HR) strategies.

"The government is actively considering setting up of a new institution on the lines of Banks Board Bureau (BBB) to avoid any legal issues going forward," a government official, privy to the development, told ET.

This comes after the selection of executives by BBB for various other institutions was challenged before the courts.

Another official said the proposed body can be an umbrella body, with BBB as its part. "It's being discussed at the highest level," he added.

BBB's mandate could be restricted to selecting candidates in state-run banks.

The names are yet to be finalised but former Life Insurance Corporation managing director Usha Sangwan and former New India Assurance chairman Atul Sahai could be part of the new structure, officials said.

Last year, the Delhi High Court had said BBB cannot select general managers and directors of public sector general insurers as it was not a competent body. "The appointments made pursuant to the impugned selections of general manager and directors of PSICs (public sector insurance companies) are liable to be set aside. It is ordered accordingly," it had said.

This led to the government transferring Madhulika Bhaskar, then general manager of General Insurance Corporation (GIC Re), to New India Assurance as acting chairman.

"This new institution will have members from both insurance companies and other requisite fields," said the first official quoted above, adding that this will clear the way for all future appointments.

Separately, the government may bring in new people to the BBB to succeed members whose terms ended last month. Set up in 2016, BBB, with the former comptroller and auditor general (CAG) Vinod Rai as its chairman, was to make recommendations for the appointment of whole-time directors as well as non-executive chairmen of public sector banks. It was further entrusted to engage with the board of directors of all the PSBs to formulate appropriate strategies for their growth and development.

Since April 2018, BBB has been headed by B P Sharma, former secretary in the Department of Personnel and Training. The other part-time members are Vedika Bhandarkar, former MD of Credit Suisse, P Pradeep Kumar, former MD of State Bank of India, and Pradip Shah, founder MD of rating agency Crisil.