RBI quietly buries specialised cadre plan

The Reserve Bank of India (RBI) is learnt to have quietly shelved the plan for raising a specialised supervisory and regulatory cadre (SSRC) to strengthen its supervisory wing to check bank frauds and other regulatory violations in the system.

About a year ago, the apex bank had assured the Parliamentary Standing Committee on Finance about the cadre, but the plan hasn't made any headway since.

After Punjab National Bank (PNB) scam, questions were raised over the RBI's supervision of scheduled commercial banks. In response, RBI had come up with a grandiose plan of creating an SSRC. Its Central Board had, in May 2019, approved the creation of such a cadre and the RBI had announced the creation of SSRC on November 1, 2019.

The RBI has silently buried the plan and even its latest annual report has no mention of the SSRC.

The RBI spokesperson is yet to respond to a mail sent in this regard.

Explaining the reasons for shelving the SSRC, the source, however, said the scheme drew a lukewarm response for several reasons. "Merely 5 per cent of its staff opted for the SSRC. The poor response was mainly due to apprehension among the staff regarding the HR issues like lack of mobility, promotional avenues, etc. Besides, there was no proper communication or stakeholder consultation by top management. The unions also opposed the move," the source said.

Another reason is that "traditionally, the supervisory vertical is headed by a deputy governor, who comes from a commercial bank. This leads to obvious conflict of interest. He heads the department, which is supposed to examine his own performance as managing director of the commercial bank."

"There have been several instances in the past where serious concerns, regulatory violation and even vigilance cases had to be dropped from the (assessment) report. Further, in many cases it has led to vindictive action even to the extent of blocking the promotion of the entire supervisory team examining the particular bank," the source said.

"Incidentally, RBI is one of the very few public institutions in India, which does not have a whistleblower policy or effective grievance redressal system. Also, the RBI as a regulator, must display highest standards of corporate governance for financial institutions to emulate," the source said.