FM’s new steps to back bank decision on big frauds

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, an official statement said.

“Similarly, the instructions of DFS of 2015 regarding compulsory examination of fraud for all NPA accounts exceeding Rs 50 crores have been aligned with the CVC circular of January 15, 2020 whereby all such cases of suspicious fraud are to be initially referred to the Advisory Board for Banking and Financial Frauds (ABBFF) headed by former vigilance Commissioner T M Bhasin,” it added.

Finance Minister Nirmala Sitharaman at several occasions 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.

There are widespread apprehension that bankers could be hauled up for their bona fide commercial decision go wrong.

To assuage concerns, the finance minister had assured the bankers that a distinction would be made between genuine commercial failures and culpability last month in a meeting with heads of the public sector banks (PSBs), which was also attended by the CBI Director.

She had also told bankers that the CBI will have discussions, and workshops with the bank officials from the level of vigilance officers, senior managers to general managers to explain and eliminate apprehension from their minds.

Considering the complexities involved in the commercial decisions of managers in public sector firms, the Central Vigilance Commission set up the Advisory Board for Banking and Financial Frauds (ABBFF) for a mandatory first level examination on suspected frauds in excess of Rs 50 crore, involving public servants equivalent in rank to GMs and above, before enquiry or investigations begin.

In order to boost staff morale and reduce scope for harassment, Sitharaman had also directed public sector bank heads to clear long pending vigilance cases against their officials for alleged malpractices.

The banks should form a panel headed by General Manager and it should either take decision to pursue the case with timeline or close the file of long pending vigilance cases, she had instructed.