Monday, February 24th, 2020

Modified 2015 framework on large value frauds

INVC NEWS      
New Delhi,

The Finance Minister hasrepeatedly assured Bankers that adequate measures would be takento protect honest commercial decisions taken by them and distinction would be made between genuine commercial failures and culpability.Every Bank was also required to take steps to dispose of internal disciplinary and vigilance cases in a time bound manner so that such cases do not linger on account of procedural delay so asto avoid adverse impact on staff morale and reduce scope for harassment.As part of this endeavor of Government, Section 17A was incorporated in Prevention of Corruption Act requiring prior permission before initiating investigation against a public servant.

 

The Central Vigilance Commissionhas, considering the complexities involved in the commercial decisions of managers in public sector,   in the meanwhile,also 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 croreinvolving publicservantsequivalent in rank to  GMs&above, beforeenquiry or investigations begin.

 

Government has now modifiedits 2015 framework onlarge value fraudsdoing away with the personal responsibility of the MD & CEOs of PSBs for compliance withvarious prescribedtimelines.Powers have been delegated by Department of Financial Services (DFS)to the Boardsof Public Sector lenders to put in place a suitable mechanism for ensuring compliance of the various timelines laid down in RBI and CVC circular(s). Similarly, the instructions of DFS of 2015 regarding compulsory examination of fraud for all NPA accounts exceeding Rs. 50 crorehavebeen aligned with the CVC circular of 15th Jan, 2020 whereby all such cases of suspicious  fraud are to be initially referred to the ABBFF.

 

Government has separately directedBanks on 27.01.2020 to set up a committee of senior officers to monitor progress of pending disciplinary and internal vigilance casesas procedural delay, on one hand, adversely affects morale of the employees and on the other, breeds inefficiencies in the system.Therefore, every Bank must setup a Committee of Senior  Officers to review pending disciplinary and internal vigilance cases and frame timelinesto reduce delays in deciding such cases.

 

STEPS BY GOVERNMENT

Section 17A inserted inPC Act requiring prior permission before initiating investigation against a public servant.
ABBFF constituted for first level of examination of suspected frauds in excess of Rs.50 crore.
Personal responsibilities of MD &CEOs of PSBs for compliance with prescribed times lines done away with.

Compulsory examination of fraud for all NPA accounts exceeding Rs. 50 crorehas been aligned with CVC circular of 15th Jan, 2020 whereby all such cases of suspicious    fraud are to be initially referred to the ABBFF.

Committee of Senior Officers to monitor progress of pending disciplinary and internal vigilance cases and to frame timelines to reduce delays in deciding such cases.

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