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Needed, A Dedicated Education Centre for Management in Financial Sector




M G Warrier

This year's New Year message from the RBI governor, has covered extensively several crucial issues concerning the management of Indian financial sector and the role of regulatory and supervisory bodies in doing it efficiently. The document can become a reference point in future, though, perhaps, at the time of writing, Dr Raghuram Rajan was addressing his "colleagues". Rajan has brought in one place several impediments faced by the government and statutory bodies engaged in regulation and supervision, basically because of talent deficit at the highest level. Here we consider some measures that can address some of the concerns relating to HR-related issues expressed in the document in some detail with focus on RBI.

The RBI Annual Report 2014-15 also had the Rajan touch and did express several concerns that needed support from the government of India to enable RBI to perform effectively. Strangely, media (both electronic and print) which usually give broad coverage to RBI's annual reports did not take adequate notice of the report. Of course, the report is with the government and hopefully, appropriate action will be taken on the issues highlighted in the Annual report.

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Reverting to the New Year Message, let us go through some of the concerns expressed by RBI governor. Here are the excerpts:

"If we demand more of the regulated, we should not be found wanting ourselves. As with all organisations, we are reliant on a few stalwarts who carry the organisation on their broad shoulders. These are the best performers. There is a second tier that exceeds the needs of the job through their effort or their capabilities, but they fall a little short of being truly excellent. A third tier consists of time-servers, for whom the job is a source of livelihood but who have lost the desire to excel. They put in a reasonable day's work, but not an ounce more than what is demanded of them. And then there are those who are overwhelmed by the work or who have lost any desire to perform. I have encountered all these types at the Bank.

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Unfortunately, our performance evaluation system did not help us identify who needed motivation and improvement, and how they could be helped to do so. Almost everyone was deemed excellent, ranging from those who gave their heart and soul for the Bank to those who shirked all responsibility or duty.

We need to change this, to reward those who perform and to help those who do not.

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Let me highlight an issue that especially concerns me. As I sit through promotion interviews, I am worried that people are losing curiosity, the desire to learn and improve themselves. I am concerned that some people do not read outside the papers that come across their desk, that they have no idea of other branches of the Bank and their work, let alone the wider world. We emphasise specialisation, but that does not mean there is no need to read the newspapers, let alone magazines and books. This has to change if the organisation is to remain vibrant. In complacency and self-satisfaction lies a slow descent into mediocrity.

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Finally, we are embedded in a changing community. What was OK in the past is no longer all right when the public demands transparency and better governance from public organizations. I am glad to report that henceforth our budget will be approved by our Central Board. Our dividend policy is currently being debated with the Government, but we intend to make it rule-based using cutting edge principles, so that the stability of the Bank is protected, even while the Government gets all possible dividends from ownership. We also intend to improve the Board’s oversight of wage and perquisite negotiations. Transparency and good governance are ways to protect ourselves from roving enquiries - everyone should recognize that an effective regulator has enemies, and like Caesar’s wife, should be above all suspicion."

True, many of the concerns relate to the performance of mandated role by the central bank. But a second reading will testify that they cannot be addressed in full, from a long term perspective, without an overhaul of the recruitment, placement, training and compensation packages in the entire financial sector. For the purpose support and guidance have to be provided by central government.

A dedicated Education Centre

Earlier budgets have provided lavish financial support to IIMs and IITs in different situations. This year Centre could consider establishment of a central education centre (I am not calling it a university, as the role expectations are larger!) for financial sector. Some of the activities the centre could coordinate and support are:
i) Study the available opportunities available in universities and educational institutions for students aspiring to take up a career in financial sector and suggest changes/additions taking into account the present needs.
ii) Interact with regulatory and supervisory bodies in the financial sector to understand the skill-development needs of existing staff across institutions in public and private sectors and provide modules for training programmes which could be conducted at existing educational/training establishments.
iii) On the basis of (i) and (ii) coordinate education/training programmes.

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An Integrated Financial Sector Service

Available talent within the financial sector need to be pooled and made available for exploitation across public and private sector organisations including regulatory bodies in the financial sector. Future needs can be taken care of by introducing an Integrated Financial Sector Service on the lines of All India Civil Services and Tata Administrative Service. A nucleus for such a service could be created by conducting a competitive/qualifying examination for present serving staff with satisfying certain pre-decided criteria including qualification, age and service and making them eligible for lateral mobility among institutions.

What do you think about this - Are the current bank training centres enough or should we look at a more comprehensive approach?

(The writer is former general manager, RBI. Now a freelancer based in Mumbai and author of the 2014 book "Banking, Reforms & Corruption: Development Issues in 21st Century India".)

Disclaimer: [The articles written by author contains only the academic view of the writer and purely for discussions and updation of the knowledge of the bankers. The views expressed in the articles may not at all be subscribed by the organisation where the author is working and / or]

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