Public sector banks want to set up an internal committee to vet cases pertaining to commercial decision taken by officers below the rank of general managers that have gone bad, a suggestion reportedly well received by the finance minister, P Chidambaram.
It is proposed that only if the committee set up by the bank feels that the it was not a bona fide commercial judgement will it be referred to the central vigilance authority (CVC) and the Central Bureau of Investigation (CBI). The proposal was put up before the finance ministry, to which bankers have got a positive feedback. The issue was also raised at the recent meeting between the finance minister and the chairmen of public sector banks.
The finance minister is reported to have told bankers that the issue will be referred to the prosecuting agencies and legal experts for their opinion. At present, the Reserve Bank of India (RBI) has set up a bank fraud board which examines cases pertaining to commercial decisions taken by officers above general managers. It is only after the case is vetted by this board and if it so feels that it is referred to the vigilance authorities.
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The officers association have been demanding a similar committee at the bank level which would examine the merits of the case and form a opinion on whether a commercial judgement is bona fide. The institution of such a committee is expected to go a long way in reducing the fear among bank officers that bona fide commercial decisions will not be questioned. There is a need for building the confidence of the bank officers. This is especially true when they have to deal with rehabilitating sick units, said the chairman of a public sector bank.
Because officers were not reacting in time on account of fears of accountability, units which are showing signs of sickness were becoming terminally sick adding to the non-performing assets of the banks.
Many banks have also set up internal committees which take a decision on recovery, settlement and write off of non-performing assets.
In the case of Indian Bank, one of the committee members is a retired judge who advises on legal implications of the decisions taken. While the recommendation of these committees are more of an advisory nature, they are generally accepted by the board.