Vinod Rai: The calm beneath the storm

BACKSTAGE

, additional secretary in the finance ministry's financial sector division, has been busy trying to clear the air on the controversial restructuring of the Infrastructure Development Finance Company (IDFC).

Earlier this month, IDFC's entire board resigned in protest against the government's "realignment" plans.

This is the only hurdle that Rai, an Indian Administrative Service (IAS) officer of the 1972 batch, has faced in his tenure of over two years in his present assignment in charge of the country's financial institutions (FIs).

Yet, it would be hard to believe that he is under pressure or burdened with work "" certainly, Rai would never give you that impression. In addition to handling the financial institutions (FIs), he is the chairman of the Pension Fund Regulatory and Development Authority and is working out the set of rules and entry norms for the entry of pension funds in India.

But it is his job as additional secretary that keeps him busier, and most of it has to do with restructuring. He inherited a set of financial institutions that were not in the best of health.

Ranging from restructuring of liabilities of IFCI and Industrial Development Bank of India (IDBI) to the Rs 20,000-crore steel sector revamp and the clean-up of state financial corporations, Rai has overseen the developments closely, often picking up the phone to talk to bank and FI chiefs asking them to fall in line.

At the same time, Rai and his team were also preparing a restructuring blueprint for IFCI and IDBI. While the Bill to repeal IDBI Act was cleared by Parliament last December, in February, the government convinced Punjab National Bank to take over IFCI.

But the process is still incomplete. The details of IDBI's restructuring are being worked out, including issues like merger with Industrial Investment Bank of India (IIBI) and IDBI Bank. IDFC also came under the microscope since it was perceived that the Mumbai-headquartered FI was not doing its job.

For the past year, the financial sector division has been repeatedly asking the IDFC management to improve credit flow to the infrastructure sector.

The company was beginning to increase the credit flow but with Finance Minister Jaswant Singh announcing the Rs 50,000 crore infrastructure fund, the financial sector division drew up various restructuring scenarios ranging from merger with the State Bank of India to increasing the commercial bank's role in the FI. The realignment moves resulted in the IDFC top management putting in its papers and Rai was asked to defuse the crisis.

The Kerala-cadre IAS officer has since then been fending off criticism and opposition. He's been holding consultations with stakeholders including state-owned banks and FIs, foreign shareholders as also IDFC executives.

The soft-spoken officer, who has worked in various ministries at the Centre ranging from the commerce ministry (as director and deputy secretary during the licence raj of the eighties) and joint secretary in the defence ministry and the cabinet secretariat, is well aware of how the government can stamp its authority but his colleagues say that Rai believes in consensus.

"If we really wanted to stamp our authority we could have easily gone ahead and appointed M Damodran [chief of UTI and IDBI] or a bureaucrat in place of Nasser Munjee [IDFC CEO]," says a finance ministry official.

But Rai can be a tough taskmaster and is willing to take on opposition if the government's plans are derailed. For instance, in case of the IDFC executives, he is said to be keen to take up the matter at the next board meeting to ensure that those who have put in their papers are brought to task.

Everyone, including some of his new-found detractors in IDFC, are impressed with Rai's disposal of matters and maintains his calm even during crises.

Colleagues say that except for a short period of time when he was given additional responsibility of the Foreign Investment Promotion Board, he did not carry work home and still manages to take time off for a few games of tennis.

He is also extremely accessible to his staff. Subordinates can always walk into his room and discuss matters freely since, they say, Rai would find ways to solve an issue. "There some officers who go by every written word in the rule book but he believes in getting the job done without bending the rules. If the intention is not wrong, mistakes will be overlooked," says an officer who has worked with him.

His present stint in the finance ministry, which started as a joint secretary till his promotion last year, has stood him in good stead so far.

Rai is tipped to take over as the head of the financial sector division if his boss NS Sisodia is appointed revenue secretary later this year. The IDFC experience is going to make his case even stronger.