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The structural change brought in by the Reserve Bank of India (RBI) recently through creation of a specialised supervisory and regulatory cadre is now snowballing into a bigger issue with the staff moving the Central Board of the apex bank.
There has also been a fear that the regulatory and supervisory department will be hived off from the RBI, going forward, as suggested earlier by Financial Sector Legislative Reforms Commission (FSLRC) under BN Srikrishna.
“We have written to the Board requesting intervention as many staff from the newly-created supervisory and regulatory department are opting out, and we have not been consulted in the matter. There is a human resource crisis,” Samir Ghosh, General Secretary, All India Reserve Bank Employees Union told BusinessLine on Wednesday.
To revamp its supervisory mechanism, the RBI created a specialised supervisory and regulatory cadre under the Department of Supervision (DOS) and the Department of Regulation (DOR) in November 2019 as a distinctly separate department in the bank. The officers opting for this department will not be allowed to move out of it, and the department will be ‘fenced off’.
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According to Ghosh, the RBI is mostly relying on online data provided by regulated entities unlike the previous practice of online inspection. “We feel that onsite inspection of banks and other entities by the RBI is a time-tested method, though some online inspection can always be there to an extent,” Ghosh said.
Last week, the RBI staff body wrote to the Governor requesting a re-look at the issue. As there has been no response, it has now written to Manish Sabharwal, Member, Central Board, RBI, who is in-charge of staff matters.
The on-site supervision of banks has to be restored and thoroughly planned, instead of solely depending on the inputs provided by regulated entities which might be contrived, as evidenced in the PNB scam, IL&FS fiasco and PMC Bank fraud, the association said in its representation.
Separate entity?
The employees have a bigger fear. “We are worried that creation of an exclusive department for supervision will facilitate its scissoring off from the RBI to form a separate entity as was suggested by the Srikrishna Commission a few years back, which is opposed by us,” Ghosh said.
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