Govt eases pressure on state-owned bank heads in fraud cases
MUMBAI: Heads of public sector banks will no longer be personally responsible for compliance with various timelines that have been laid down for reporting large value frauds, the finance ministry announced on Tuesday.
“The government has now modified its 2015 framework on large value frauds doing away with the personal responsibility of the managing directors and chief executive officers of public sector banks (PSBs) for compliance with various prescribed timelines,” the ministry said on Tuesday.
It said powers have been delegated by the Department of Financial Services (DFS) to the boards of PSBs to put in place a mechanism for ensuring compliance of the various timelines laid down in Reserve Bank of India (RBI) and Central Vigilance Commission (CVC) circulars. This modifies the finance ministry’s notification from May 13, 2015 that put the overall responsibility for ensuring compliance with the various timelines on bank chiefs.
Experts pointed out the statement only specifies that bank chiefs will not be held accountable for non-adherence of timelines and does not absolve them of the fraud itself if any. “It is more like a procedural matter and the clarification will really help. However, it would be improper to stretch it to any matter of fraud or negligence that can be ascribed to anyone including the CEOs of public sector banks,” said Ashvin Parekh, managing partner at Ashvin Parekh Advisory Services.
The finance ministry also told banks to set up a panel to monitor the progress of disciplinary and internal vigilance cases against bankers. “Government has separately directed banks on January 27 to set up a committee of senior officers to monitor progress of pending disciplinary and internal vigilance cases as procedural delays, on one hand, adversely affect the morale of employees and, on the other, breeds inefficiencies in the system,” the ministry said on Tuesday.
Mint reported on December 28 that the FM had instructed banks to form committees comprising general manager-level officials, to look at the vigilance-related cases that are yet to be closed.