OBLITERATION OF TRUST

The introduction of private professionals signals a subtle and ingenious shift in the governance architecture of state-owned financial institutions and a serious legal and constitutional transgression

- Santosh Kumar Mohapatra

On 4 October, in an executive order, the Appointments Committee of the Cabinet (ACC), approved revised consolidated guidelines for appointment of Whole Time Directors, Managing Directors, Executive Directors and Chairpersons in public sector insurance companies like the Life Insurance Corporation of India (LIC), Public Sector General Insurance (PSGI) Companies and the Public Sector banks including the State Bank of India.

The Department of Financial Services (DFS) under the Union Ministry of Finance (MoF) has formally circulated these revised procedures to all public sector banks and state-owned insurers. In a major procedural change, the Financial Services Institutions Bureau (FSIB), which is responsible for selecting and recommending candidates for top financial appointments, has been authorised to engage independent human resource agencies to assess applicants from the private sector.

The proponents of these reforms argue that they are intended to strengthen professionalism, governance, accountability, innovation, competitiveness and accelerate digital transformation in public sector banking system and insurance industry.