The Reserve Bank of India’s (RBI) decision to appoint a chief financial officer (CFO) is facing stiff opposition as its officers’ association has questioned the move on the grounds that such a requirement is neither a statutory nor a legal mandate.
In May, the Reserve Bank of India invited applications for the post of CFO with the rank of an executive director from outside the organisation. The RBI had said the CFO would be responsible for accurate and timely presentation and reporting of financial information of the central bank, and establishing accounting policies and procedures and ensuring compliance with regulations.
In a letter to Governor Urjit Patel, Reserve Bank of India Officers’ Association said the move to induct a CFO came as an “unpleasant shock” as they were not clear about the intended purpose for the move.
‘Not clear’
“The rationale behind recruiting a CFO in the rank of an ED is not at all clear. RBI has been set up through an act of the Parliament and there is no statutory requirement of having a CFO,” according to the letter, a copy of which was reviewed by The Hindu.
“Further, we are not governed by the companies act and therefore, there is no legal requirement of having a CFO.”
The officers’ association argued that since no accounting standards strictly applied to a central bank, it was not clear why the central bank should have a CFO.
By having a CFO, RBI is gradually opening doors for the Government to have a say in its internal matters since, “from control perspective, if anyone has a right to appoint an independent CFO in RBI, it is the Government of India,” according to the letter.
This is not the first time that the central bank’s move to have an outsider is facing resistance. Mr. Patel’s predecessor, Raghuram Rajan’s proposal to induct a chief operating officer with the rank of a deputy governor, also faced opposition and the plan was finally shelved.
The officers’ body has also questioned the need to induct the CFO from outside as there is enough staff within the organisation with the required skill set. “We strongly feel that the skill sets required for a CFO are adequately available in the bank (e.g. there are several chartered accountants in the bank) in its existing experienced senior level staff,” the letter said, adding that recent experiments on lateral hires have not met the objectives of the central bank.
On-off recruitment
The officers have also reminded the governor that three years ago when they were opposing lateral recruitment of an officer in the ‘F’ grade in one of the research departments of the bank, the then governor assured the United Forum of Reserve Bank Officers and Employees that the recruitment was one-off.
“Today, our association and the members feel betrayed as the commitment has not been honoured,” according to the letter.
Requesting the proposal to induct the CFO to be kept in abeyance, the officers’ association sought a meeting with Mr. Patel to discuss the issue. An e-mail sent to the RBI spokesperson went unanswered.
