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Thursday, December 25, 2008

How not to recruit a deputy governor at RBI

When I see malfunctioning organisations, all too often, the root cause lies in a bad HR process, or a weak set of mechanisms for hiring, firing, incentivising and training. In similar fashion, I think that the proximate source of bad governance in India is poor HR policies of government. Conversely, one of the most important elements of good governance is a well functioning appointments process.

By and large, the UPA has done a good job of recruitment. But I saw a paragraph today by Kumud Das in Financial Express about the recruitment of a deputy governor at RBI which struck me as being all wrong:

A ministry of finance source told FE on Wednesday that the search committee had met in New Delhi on Monday and reiterated the eligibility criterion laid down earlier for the position, which states that the incumbent must have served as chairman & managing director of a nationalised bank for at least two years.

If this is true, it is surely wrong. In these difficult times, we need the best man (or woman) for the job. This goal is hampered by narrowing the selection in this fashion. A meritocracy is one in which the best man for the job gets it, and there are no ifs and buts.

I can think of three outstanding candidates for this job, and none of them were ever chairman and managing director of a nationalised bank. Ruling out these three candidates from the appointments process for this job hinders the quality of the outcome.

Such recruitment policies damage the ability of RBI to grow into a top quality central bank. RBI should draw on the superior HR policies at SEBI as a role model: the recruitment of full-time board members at SEBI (which is equivalent to the deputy governor role at RBI) has no such quota system in the recruitment process.


  1. i agree with you that if the practises hamper in hiring the best (wo)man for the job then those practises has to be revisted or changed.
    Practises/processes shouldn't be hampering the progress.

    btw u didnt mentioned the three probables. :-)

  2. This is how the central bank governor was picked in the Maldives- Parliament voted for the person that it's own comittee said was not qualified for the job.


    Najeeb Not Qualified For MMA Governor, Says Committee

    The parliament committee appointed to scrutinise the nomination of Fazeel Najeeb for the position of governor of the Maldives Monetary Authority (MMA) has said he is not qualified for the post.

  3. I disagree with u completely...if u say that this practise is flawed then i guess u shud suggest the alternative....i believe that someone who has served a PSU bank is in the best position to understand the implications of an RBI action.And to be fair to u actually it is possible to raise fingers at any recruitment policy across the globe...u jst fell in the trap.

  4. Hiring should be based on job description of deputy gov of RBI. If it requires the skill sets of chairman or MD etc, then it should go to the persons who are/were chairman or MD. We hope that you do not support someone who are your friends or from your cartel.

  5. So many of us can come up with three eminently suitable names ! Some basic criteria needs to be laid down for the selection process. Since the Reserve Bank has a Banking Supervisory role, it makes sense that at least one of the Deputy Governors be some one who can bring a Banker's perspective to policy making.


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