Sunday, March 30, 2014

Appointment Of Deputy Governor Of RBI

RBI has to pick one successful banker for the post of Deputy Governor of Reserve bank of India to fill the gap created by Sri K C Chakravorty who resigned a few days ago. I do not know the criteria for picking up a person and for deciding his suitability for the post but as per experience of various interviews , one may define criteria as any one or all of following .

It may be flattery or bribery or it may be performance shown by him in banks where he or she has served as Chairman and Managing Director or Executive Director. 
It may be to please some politicians who recommended the name (normally it carries highest weight) or it may be under the pressure of Ministry of Finance. It may be the capacity to preach sermon to junior bank staff or the capacity to deliver good lectures to convince the government just like politicians convince voter before election. Sometimes even a candidate who dress and act well as film actor Abhitabh Bachhan is also picked up by interviewer for top posts in government banks or for other departments.

People who are associated with KC Chakravorty and who knew the past history of his banking understand very well what type of person he was when he was working for a bank in different capacities and how he was appointed for the post of Dy governor.

But now keeping in view past experience and taking lessons from performance of outgoing Dy Governor and others and keeping in view the expectations of RBI from such persons, I would like to suggest RBI and Government of India to order forensic and thorough audit of the bank, the candidates for such post belong to and try to find out whether their working as CMD have resulted in improvement or deterioration of bank's health.

RBI should assess, ascertain and confirm that the new incumbent has not violated RBI norms in sanction of high value loans and in identification of Non Performing Assets like EDs and CMDs of United Bank or UCo bank or Central bank or Allahabad Bank who caused unrecoverable loss to the bank, who caused deterioration asset quality of that bank and who caused capital erosion in that bank. RBI should confirm to people of India that the aspiring candidate for the post of Dy governor  did not manipulate figures, did not taper with the system and did not conceal bad debts to fraudulently project good image of his bank by fabricated financials.

Normally RBI has to do what their mentor and their creator minister suggest to do. However if RBI really wants to ensure better health of public sector banks at least in coming days and RBI does not only pretend be protector of banks , they must carry out through and complete pathological test of the bank from where the new incumbents , he or she is to be picked up for the said post.

What I guess from my experience, the top officials of banks who are likely to be the candidates for the said post have contributed only NPA and bad debts to their banks. Health of these banks is not at all better than that of UBI which has been exposed by a bold lady CMD who resigned only under the pressure of NPA and then under intolerable pressure to recover the bad debts from recalcitrant and willful defaulters in short period which RBI defined.

RBI could not punish the ED and CMD who created and contributed NPA in UBI but tried to punish who identified the sickness and asked for remedial cure.RBI could not punish who were involved in bad lending and who were negligent in monitoring man and machines.Normally a person who is bad has support of many heavy weights behind him and hence normally exonerated from all charges.This has happened in UBI episode too.

I am most confident RBI will take necessary care before appointing a new person for the post of Dy Governor of RBI in place of KC Chakravorty.  

I of strong view that the system of Interview must be abolished because it only creates scope for corruption.When performance record of a person for past two or three decades are available , there is no need at all for further checking the person in Interview .Interview is an ordeal which only flatterer and corrupt can only go through.

There are some clever top bankers who are master in managing money,men and machines as per their  sweet will and as per the will of his mentor.

A man who can mange excellent media coverage    on performance of the bank he or she  is associated with also become preferred choice of the Interviewer and get quick elevation   in his career.          

A person who manages ministers and top administrators to recommend for his promotion also get chance to get promotion.   

A man who buys best rating from CVC, CBI and Rating agencies are also preferred by Interviewers. 

A man who can manage money for selectors get preference.


Unfortunately it is a bitter truth that a real and honest performer fails to manage media, CVC, CBI, ministers , top officials etc in his favour and hence discarded by Interviewers. Root cause of weakness of banks lies not in HR policies but in HR policy execution only.

This is very common story for promotion and elevation of bank officials in particular and Government officials in general.     

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