The MD and CEOs of public sector banks will now not bear any personal responsibility in cases where genuine banking decisions end up as commercial failures.
This is part of the government's latest move to protect commercial decisions taken by bank heads, an official said on Tuesday.
Finance Minister Nirmala Sitharaman has on 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 is widespread apprehension that bankers could be hauled up for bona fide commercial decisions that go wrong. In this context, former PM Manmohan Singh has said sometime back that bankers are reluctant to issue new loans for fear of retribution.
With the latest decision, all cases of frauds in the NPA accounts exceeding Rs 50 crore will be referred to the Advisory Board for Banking and Financial Frauds for first level examination of the suspected frauds. The government has also directed the banks separately to set up a committee of senior officers to monitor progress of pending disciplinary and internal vigilance cases.
To avoid adverse impact on the staff morale and reduce scope of harassment, the government has already incorporated Section 17A in the Prevention of Corruption Act, requiring prior permission before initiating investigation against a public servant. These measures are expected to improve the sentiment among bankers and help them take lending decisions to drive the economy which is facing a slowdown.
source https://www.freepressjournal.in/business/honest-follies-fig-leaf-cover-for-bank-mds
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