Strategic

STRATEGIC ASPIRATIONS OF THE RESERVE BANK OF INDIA

Presented by:

GAURI MATHUR

MBA(F&C)-Sem. III

Structure of the Presentation

Brief on R.B.I.

Ques. 1:

1. What a good vision and mission statement be?2. Evaluation of the Vision and mission statements of the R.B.I.

Ques. 2:1. RBI’s Strengths & Weaknesses2. The current approach of the R.B.I.3. The suggested approach4. Brief overview on the current trend of central bank autonomy5. Suggestions

Brief on R.B.I.

Established on 1st April, 1935 under the provision of the RBI Act, 1934.

The Reserve Bank ( transfer to Public Ownership) Act, 1948 empowered the Central Government to issue such directions to the RBI as it might, after consultation with the Governor of the Bank, consider necessary in public interest.

The Reserve Bank entered upon its career as a state owned institution from January 1, 1949.

The main function of the Bank is to act as the note issuing authority.

The RBI is the controller of the foreign exchange.

It is the sponsor bank of SBI, IDBI, NABARD & NHB.

The bank sits on the board of all banks and it counsels the Central and State govt. and all PSUs on monetary and money matters.

The management of the RBI is the responsibility of the central board of directors.

There are four local boards based at Chennai, Kolkata, Mumbai and New Delhi.

The day-to-day management of the RBI is in the hands of the executive directors, managers at various levels and support staff.

There are about 22000 employees at RBI, working in 25 departments and training colleges.

Organizational Structure of the RBI

Roles of RBI

EVALUATE THE MISSION AND VISION STATEMENT

OF RBI.

Visioning can be considered as establishing where

you want the organization to be in the future;

A vision should be…

An organizational charter of core values and principles

The ultimate source of organizational priorities, plans and goals

Realistic and idealistic at the same time

A puller into the future

A determination and publication of what makes the organization unique

A declaration of independence

Evaluation of RBI’s VISION

The RBI aims to be the leading central bank with:

Credible

Transparent

Proactive and

Contemporaneous policies

to be a catalyst for the emergence of a globally competitive financial system that helps deliver a high quality of life to the people in the country

Values and principles delivered by the Vision statement of the RBI: Credibility, Transparency, Contemporary and Proactive policies.

Organizational priorities: establishment of a sound and globally competitive financial system along with delivering a high quality of life for the people of the country.

The vision statement of the RBI professes that the management be abreast with the contemporary times and frame the policies of the bank accordingly for the fulfillment of the above stated goals and objectives.

Realistic and Idealistic at the same time (realistic in order to be perceived as

achievable and thus motivating and idealistic enough not to be achieved without strech and thus set standard of excellence)

Mission statements describe why your company or business unit exists.

A mission should be… Feasible

Precise

Clear

Motivating

Distinctive

Should indicate the major components of strategy

Should indicate how objectives are to be achieved

Evaluation of RBI’s MISSION

RBI seeks to develop a sound and efficient financial system with monetary stability conducive to balanced and sustained growth of the Indian economy.

Is feasible: as it aims to achieve a balanced & sustainable and not a supernatural growth of the economy.

Is precise & clear: as it briefly states the overarching goals, i.e. of developing a sound and efficient financial system, for the management.

The mission statement of the RBI clearly states the long term objectives of the RBI, i.e. to achieve a balanced and sustainable growth of the Indian economy in the long run, and also identifies the path to be taken to achieve this objective of the organization.

HOW MISSION HELPS IN ACHIEVING VISION

core beliefs and values + purpose =

guiding philosophy

guiding philosophy + mission = vision

QUES 2:-SHOULD THE R.B.I. GO FOR A SYSTEMATIC AND COMPREHENSIVE STRATEGIC PLAN IN PLACE OF ITS EARLIER PRAGMATIC APPROACH OF RESPONDING TO ENVIRONMENTAL EVENTS AS AND WHEN THEY OCCUR?

RBI’s Strengths and Weaknesses

Strengths: A large body of competent

officers and staff.

Access to key data on the economy.

Wide organizational network with 22 regional offices.

Established infrastructure.

Ability to attract talent.

Financial self sufficiency.

Weaknesses: Structural rigidity.

Lack of accountability and slow decision making.

Eroded specialist know-how.

Strong employee unions with rigid industrial relations stance.

Surplus staff.

Weak market intelligence.

RBI’s Current Approach

Owing to its weaknesses of:o Slow decision makingo Eroded specialist know-how; and,o Weak market intelligence the RBI has always been the one to react to the

changing environment.

The RBI adopted the time tested technique of responding to the external environment in a pragmatic manner and making piecemeal changes.

However, this approach is highly flexible and leaves good scope for making changes at any time considering that the initial changes made are small and retractable.

The Suggested Approach

Adoption of a systematic and comprehensive strategic plan.

The strategic plan reiterates anticipation of the evolving external environment in the mid term

Revisiting the organizational strengths and weaknesses

And doing away with outdated mandates for enhancing efficiency in operations in furtherance of best public interest

The results of these efforts are likely to manifest in attaining:

A visible focus Reinforced proficiency Realization of a shared sense of purpose Optimizing resource use Build up of momentum to achieve goals

However, with the adoption of a comprehensive strategic plan the flexibility of the pragmatic approach is traded off with.