New Delhi: Seeking to protect bank employees are honest, the government has come out with the ‘Framework for Accountability Staff’ where the officer in question will not be transported in the case of Bonafide Decisions involving loans of up to Rs 50 crore.
The framework would include a genuine decision and not involving fraud or mala fide intention, according to the norms issued by the Ministry of Finance.
It specifies the details and procedures to be followed for examining acts of omission and commission that kind on the part of bank officials concerned.
To save them from unnecessary hassle, it also provides a framework for the resolution of such cases against bankers.
“Banks have to start and finish the exercise accountability of staff within six months from the date of classification of the account as NPA,” the ministry said.
In the past, some senior bankers have been arrested in the case of a loan default.
Its latest being the arrest of the former chairman of SBI Pratip Chaudhuri in cases where the loan turns into a non-performing asset (NPA).
Fear of the 3Cs – Central Bureau of Investigation (CBI), Central Citizenship Commission (CVC) and the Comptroller and Audit General (CAG) – often prevents the bankers took a commercial decision that has the probability of being poor.
Governments and other stakeholders to take steps to eliminate fear.
The framework, on 29 October, provides a detailed standard operating procedures (SOPs) to be followed for the various categories of NPA, depending on the amount.
According to the guidelines, these accounts have been divided into three categories – NPA to Rs 10 lakh, Rs 10 lakh – Rs 1 crore and accounts above Rs 1 crore to Rs 50 crore.
In the NPA accounts had outstanding total over Rs 50 crore, the accountability of the staff must be inspected according to the guidelines that are still there, he said.
Commenting on the Framework, Managing Director Punjab & Sind Bank S Krishnan said it is a framework that is well conceived and it will be very helpful in instilling confidence in the bankers.
These guidelines will help drive credit growth as it helps remove doubts from the minds of bankers, he said.
However, he said the arrest of the former chairman of SBI will certainly demoralize the banker.
According to reports, the former chairman Pratip Chaudhuri was arrested on Sunday by police Sadar Jaisalmer from Delhi residence in suspected cases of loan defaults.
Guidelines for staff accountability framework for NPA accounts up to Rs 50 crore (in addition to the case of fraud) has been finalized in consultation with the central vigilance commission, he said.
Banks have been asked to modify their existing guidelines and implement a framework for NPA accounts on or after 1 April 2022.
After the casing is called, vertical audit can rely on the audit report for the previous four years and the other investigation or inspection report as a branch of inspection reports, special reports and audit of the credit process.
“If during the period of over four years, the available information is not sufficient, the designated vertical can call for additional information from branches or controlling offices etc.
or you can collect it themselves,” he said.
It also stressed the need to strengthen the internal audit system with adequate manpower and technical support.
Observing that the economy is growing very dependent on bank loans, the Ministry said the government and RBI on various occasions expressed their concern at the slow credit preparation and has stressed the eradication of fear in making business decisions.
The objective of this framework is to protect our employees for their bona fide actions and at the same time make them responsible for any errors or no action on their part, he said.
Accountability of staff is also necessary to identify and punish only employees who are prima facie responsible for the irregularities noncompliance with the systems and procedures established or because of non-adherence to norms, noted.
Motif accountability of staff is not to prevent the implementation of the initiative and decision-making, the ministry said, adding that the approach of banks to the accountability of the staff should be to instill confidence among officials for decision-making and examine the reasons for rounding account into the NPA and to not be recoverable bank funds.