Restructuring at the RBI

Reserve Bank of India has of late issued a spate of circulars on credit restructuring. Now it is going one step further and contemplating an organisational and HR restructuring to cope with emerging economic realities. In a jargon-studded notification, the RBI says:

"The Reserve Bank has been deliberating on a broad Human Resources (HR) restructuring exercise. The purpose of the exercise has been to align the organisational resources and structures of the Bank with the needs of the domestic economy and changes in the external environment.

The proposals essentially revolve around bringing functional synergies in operations by grouping departments into clusters and also leveraging human resources to bring about greater professionalism and specialisation so as to enhance the effectiveness of the Bank’s operations and policy making. The proposals involve professionalization of HR functions in the Reserve Bank, including a more effective Performance Management System and responsive and proactive skill and leadership development programmes.

The restructuring proposals and the grouping of departments into five functional clusters have been widely discussed at various levels in the Reserve Bank. One of the proposals envisaged the creation of an additional position of a Chief Operating Officer of the rank of Deputy Governor to head one of the five functional clusters.

The proposals were discussed in the Reserve Bank’s Board meeting. The Board approved the broad contours of the proposals. It advised the Reserve Bank to operationalise the restructuring, while taking into account the need to continuously keep communication channels open with stakeholders as the process moves forward. It also asked the Reserve Bank to initiate a dialogue with the Government on the additional post of Deputy Governor and the legislative changes that will be needed. The Reserve Bank will proceed further in the matter keeping such advice in view."

The economic media have been unsparing in their observation that the RBI Governor is trying to bring in his friend and classmate, Nachiket Mor as RBI's COO. Mor could be an apt choice.

But this move raises an interesting statistical puzzle. Isn't casting the net wider a saner alternative than confining one's search to one's classmates or friends? Cronyism among regulators may not be much better than crony capitalism. One may expect Nachiket Mor who stayed away from consideration as ICICI Bank CEO to preempt the Governor's suspected move to rope him in.