The Delhi high court has set aside appointments made by the Bank Board Bureau (BBB) in public sector general insurance companies stating that the same is ultra vires of the Banking Companies Act 1980. The order could have implications for the board’s role in the selection of senior management for the insurance industry.
The order was in a petition filed by a senior executive of National Insurance Company on the ground that the BBB is not a body competent to make the selections. According to the petition, the BBB is a banking body established under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.
“The very jurisdiction of BBB to make the selections to PSU general insurance boards is questioned and selection and appointments set aside. In my view, this should equally apply to CMD selections by BBB,” said K K Srinivasan, former member of insurance regulator IRDAI. Recently, the BBB had shortlisted candidates for the post of MD in the Life Insurance Corporation of India (LIC) as well.
The petition also stated that the appointments committee of the Cabinet has no role in appointing an employee of a public sector insurance company on the board as these appointments are made ex-officio. It also stated that the board contains banking experts but none from the insurance sector.
