Restructuring at RBI will be completed by month-end

The Reserve Bank of India’s organisational restructuring exercise, which has got under way and is expected to be completed by this month end, will see the number of departments at the central office increase from 29 to 36.

Five clusters

To have a consistent reporting line and broad functional homogeneity, the RBI’s central office departments are being organised into five clusters — regulation and banking services; supervision and risk management; monetary stability; financial markets and infrastructure; and operations and human resources.

Supervision of all deposit-taking financial entities (such as commercial banks, co-operative banks and non-banking finance companies) alongside the overall financial stability function and the RBI’s own risk management and internal audit functions will be placed in a single cluster — supervision and risk management — for synergy.

Regulation of all the financial entities such as banks, non-banks and co-operative banks and the services that the RBI provides to its clients starting from general public to governments and banks will be placed in a single — regulation and banking services — cluster.

The regulation of non-banking financial entities will fall under a new Department of Non-Banking Regulation, which will be carved out of the Department of Non-Banking Supervision.

New names

As part of the organisation restructuring exercise, the RBI will rechristen three departments — Department of Banking Operations and Development as Department of Banking Regulation; Customer Service Department as Consumer Education and Protection Department; and Rural Planning and Credit Department as Financial Inclusion and Development Department.

The urban banks department will be split into two — Department of Co-operative Banking Regulation and Department of Co-operative Banking Supervision.

The Financial Markets Department too will be split into two — Financial Markets Regulation Department and Financial Markets Operations Department.

From the RBI’s operational perspective, matters relating to monetary policy, research and statistics will form a monetary stability cluster.

Focus on communication

“In today’s interconnected world, central bank communication is increasingly emerging as the most potent instrument of monetary policy, nudging expectations and moving behaviour of economic agents.

“It is, therefore, felt that the Department of Communication should form part of the monetary stability cluster,” according to the RBI’s blueprint for organisation restructuring.

The monetary stability cluster will take the lead in managing international issues through the formation of International Department.

This department will take care of the RBI’s emerging role in regard to international financial diplomacy.


Source : The Hindu