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Photo: Mint
Photo: Mint

FinMin directs banks to form panel to track progress of vigilance cases

  • Mint had reported on 28 December last year that FM Nirmala Sitharaman gave instructions to banks to form committees
  • According to the ministry’s statement, the Central Vigilance Commission has, also set up the ABBFF for a mandatory first-level examination on suspected frauds in excess of 50 crore

The finance ministry on Tuesday said that it has directed banks to set up a committee to monitor progress of pending disciplinary and internal vigilance cases against employees.

“Government has separately directed banks on 27 January to set up a committee of senior officers to monitor progress of pending disciplinary and internal vigilance cases as procedural delay, on one hand, adversely affects morale of the employees and on the other, breeds inefficiencies in the system," the ministry said in a statement.

Mint had reported on 28 December last year that finance minister Nirmala Sitharaman 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.

This, the government said on Tuesday, is part of measures put in place to protect commercial decision-making by banks.

“The finance minister has repeatedly assured bankers that adequate measures would be taken to protect honest commercial decisions taken by them and distinction would be made between genuine commercial failures and culpability," the statement said, adding that Section 17A was incorporated in Prevention of Corruption Act requiring prior permission before initiating investigation against a public servant. This amendment to the Act was passed by the Parliament in 2018.

According to the ministry’s statement, the Central Vigilance Commission has, also set up the Advisory Board for Banking and Financial Frauds (ABBFF) for a mandatory first-level examination on suspected frauds in excess of 50 crore, involving public servants equivalent in rank of general managers (GMs) and above. A 15 January notification by the CVC said, it had, in consultation with the Reserve Bank of India (RBI), formed the Advisory Board for Banking Frauds and later renamed it to ABBFF.

The ABBFF comprises TM Bhasin, former vigilance commissioner, Madhusudan Prasad (former secretary, Ministry of Urban Development), DK Pathak (former director general, Border Security Force), Suresh N Patel (former head of Andhra Bank) and ADM Chavali (former executive director, Indian Overseas Bank).

“The government has now modified its 2015 framework on large value frauds doing away with the personal responsibility of the MD & CEOs of PSBs for compliance with various prescribed timelines. Powers have been delegated by Department of Financial Services (DFS) to the boards of public sector lenders to put in place a suitable mechanism for ensuring compliance of the various timelines laid down in RBI and CVC circulars," the finance ministry said.

The Mint report on 28 December had said that in order to allay the fear of three C’s, namely Central Bureau of Investigation (CBI), Central Vigilance Commission (CVC) and Comptroller and Audit General (CAG), Sitharaman assured bankers that prudent commercial decision making would be protected and there will not be any harassment from the investigating agencies.

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