RBI's oversight cadre move creates HR trouble, officers threaten agitation

The Reserve Bank of India’s (RBI’s) move to create a specialised supervisory and regulatory cadre has created a human resource (HR) problem, with officers threatening to go on agitation if their concerns are not addressed at the earliest.

Their grouse is a three-year “lock-in” for the specialised cadre. After the “lock-in”, they can move to departments not related to regulation or supervision. It is being felt that in the early stages of the transition, the staff cannot move to functional areas of the central bank without a grounding in the subject they are supposed to handle. 

While there is nothing on paper on the “lock-in” as of now, it is being discussed in the central bank’s higher echelons. 

With effect from the start of this month, the Department of Non-Banking Regulation and Department of Cooperative Banking Regulation were folded into the Department of Banking Regulation to form the Department of Regulation (DoR). And the Departments of Non-Banking, Co-operative Bank, and Banking Supervision were merged to form the Department of Supervision.

The newly created DoR has eight chief general managers (CGMs), headed by the most senior among them, Sourav Sinha; and the DoS with 10 CGMs is led by K J Dash.

“Such a large reorganisation has the potential to affect the careers of many. There is also a sense that this can turn out to be cosmetic, without leading to any betterment in regulation or supervision,” said a senior regulatory official. 

The regulatory and supervisory approaches could have been articulated internally first rather than concentrating on HR and administrative concerns, he said.

As a way out of the three-year “lock-in”, an option being weighed is to have significant lateral recruitments. An attendant issue is that all of this could, over a period of time, lead to a situation wherein the specialised cadre will not be a beneficiary of cross-pollination from other critical departments of the central bank, and become a silo.

“If these changes are to lead to a carve-out of the regulatory and supervisory functions from the central bank with only the government’s debt manager role left with it, then it is a different matter. But I don’t think there is any such plan now,” said another regulatory official.

It has been gathered that the RBI Officers’ Association (RBIOA) has written to Governor Shatikanta Das and the central board, drawing their attention to “the possible negative outcomes of the cadre”. The RBIOA has informally talked to the deputy governors and executive directors. It is unlikely that the central bank will back-pedal on the specialised cadre. Das on Tuesday said “a College of Supervisors is to be set up to augment and reinforce supervisory skills among regulatory and supervisory staff”. The central bank is also creating a wing for internal supervisory research and analysis.

This comes at a time when the RBI is sprucing up its regulatory and supervisory architecture to meet the challenges of the increased inter-connectedness and complexities of financial markets. The mergers followed a review by the RBI’s central board of “the present structure of supervision in the context of the growing diversity, complexities and interconnectedness within the Indian financial sector”, during its meeting held on May 21. On November 1, RBI gave life to its organisational rejig and said the move was to “make supervisory and regulatory process more activity based rather than being segmented purely based on the organisational structure of regulated entities”.