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Bankers, when prudent, need not fear CBI, CAG and CVC: Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman. (PTI)Premium
Union Finance Minister Nirmala Sitharaman. (PTI)

  • 'No case involving the banks goes to CBI without the banks themselves deciding to send it. There is no suo moto case which the CBI takes against the bank,' said the Finance Minister
  • Banks have been asked to clear pending vigilance cases, said Nirmala Sitharaman after review meeting with chiefs of public sector banks

New Delhi: In a bid to allay the fear of three C’s, namely Central Bureau of Investigation (CBI), Central Vigilance Commission (CVC) and Comptroller and Audit General (CAG), Finance Minister Nirmala Sitharaman on Saturday assured the bankers that prudent commercial decision making would be protected and there will not be any harassment from the investigating agencies.

“There was a concern that genuine bonafide decisions are not being made because of the worry of undue harassment. In the presence of CBI director today (we) had a meaningful conversation with banks. The misgivings have been explained to banks," Sitharaman said, adding that this will eventually expedite decision making process for banks towards lending.

“No case whatsoever goes to CBI without banks themselves deciding to do so. There is no suo moto case that the CBI takes against the banks," the minister told reporters.

Any suspected fraudulent case of more than 3 crore will be first looked upon by banks’ internal committee, which will then be sent to the banking regulator and then to the investigative agency.

At a meeting with heads of state-run banks, Sitharaman was reviewing the effectiveness of the steps taken in recent months to make capital available to businesses and non-bank lenders, besides seeking their views of ahead of her second Union bBudget on 1 February, 2020.

The development comes soon after the Prime Minister Narendra Modi said his government has corrected past weaknesses of the economy, and urged industrialists to “invest boldly", promising protection against wrong actions in genuine commercial failures.

“I want to assure the banking and corporate world that we have been able to overcome weaknesses in the system to a large extent. And so they should now take decisions fearlessly, invest boldly and spend undauntedly," Modi said last week.

Sitharaman said that CBI will develop a mechanism where the notices sent by the investigating agency will bear a registration number to avoid any scope for unauthorized communication and consequent harassment.

“While pursuing criminal action against those responsible, the agency shall be sensitive to the distinction between genuine commercial failures and culpability. It was also noted that there is need for preserving the value of the business enterprise by treating it on a separate footing from culpability of individuals, if any," the Ministry of Finance said in a statement.

To enable transparency, state-owned banks will be able to report instances of fraud through e-filing of FIRs on a designated email address of CBI, in order to avoid scope of any arbitrage due to information asymmetry. The investigative agency will also create a dedicated phone number on which any person can give information regarding any undue harassment by the investigative machinery.

Sitharaman also gave instructions to banks to form committees, with general manager level officers, to look at the vigilance related cases that have been accumulated over several years and that are yet to be closed. Such cases will have to be pursued, she said.

“Banks were also advised to ensure rigor and adherence to objective standards in selection of forensic auditors and devising objective SOPs for carrying out of forensic audit," the statement said.

To strengthen the forensic auditor empanelment process, the Ministry urged Indian Banks’ Association to put in place robust arrangements for assessing adherence to standards by forensic auditors and tie up with CBI for their training.

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