MUMBAI: The constant fear of being haunted by the Central Vigilance Commission (CVC) for taking an incorrect decision may be a thing of the past for the government-owned banks if the Reserve Bank of India (RBI) has its way.
The CVC, an authority set up to weed out corruption among government-owned units, is the most feared organization among bankers since it can question business decisions taken by lenders anytime in future, unlike its peers in private banks.
For the first time, the banking regulator has begun a dialogue with the CVC to define terms like frauds and diversion of funds with an aim to put an end to numerous cases of officers paying a price for genuine business decisions going wrong and rivals using CVC as a tool to stall many a career .
The CVC, an authority set up to weed out corruption among government-owned units, is the most feared organization among bankers since it can question business decisions taken by lenders anytime in future, unlike its peers in private banks.
For the first time, the banking regulator has begun a dialogue with the CVC to define terms like frauds and diversion of funds with an aim to put an end to numerous cases of officers paying a price for genuine business decisions going wrong and rivals using CVC as a tool to stall many a career .
If funds are diverted, but the business does not suffer, it's not a fraud. If funds are diverted by a rich company, isn't it a fraud? But if the business fails, then the authorities are quick to say there is an element of fraud," said a bank chief from a public sector bank who did not want to be named while questioning the modus operandi of the CVC.
Several senior officials from government-owned banks have refrained from taking lending decisions as they are demoralized after witnessing several of their colleagues being questioned of mala fide intention if the borrower fails to repay the money. "If a borrower fails to repay, why should the authorities question only the lenders and not hold the borrower equally accountable?" he asked.
Also, for lenders, the CVC is perceived as a very powerful organization since no general manager or executive director could be promoted to a higher level unless the CVC gives them a clean chit. To overcome this, the RBI proposes to establish a procedure and define what could be mala fide so that it can come under the purview of the vigilance authority.
"Every policy is greeted with suspicion and scrutinized for evidence of malfeasance. With no upside to making decisions, it's no wonder that decision-making has slowed. The solution, however, cannot come through inaction, but through action. Action that is, and is seen to be, purposeful, unbiased, and effective," RBI governor had said at the Bankers Conference in November.
"No doubt, mistakes will be made, but if the weight of clean actions builds up, the miasma of suspicion that pervades our society today will ebb. The RBI intends to play its part in making this happen," he said.
Several senior officials from government-owned banks have refrained from taking lending decisions as they are demoralized after witnessing several of their colleagues being questioned of mala fide intention if the borrower fails to repay the money. "If a borrower fails to repay, why should the authorities question only the lenders and not hold the borrower equally accountable?" he asked.
Also, for lenders, the CVC is perceived as a very powerful organization since no general manager or executive director could be promoted to a higher level unless the CVC gives them a clean chit. To overcome this, the RBI proposes to establish a procedure and define what could be mala fide so that it can come under the purview of the vigilance authority.
"Every policy is greeted with suspicion and scrutinized for evidence of malfeasance. With no upside to making decisions, it's no wonder that decision-making has slowed. The solution, however, cannot come through inaction, but through action. Action that is, and is seen to be, purposeful, unbiased, and effective," RBI governor had said at the Bankers Conference in November.
"No doubt, mistakes will be made, but if the weight of clean actions builds up, the miasma of suspicion that pervades our society today will ebb. The RBI intends to play its part in making this happen," he said.
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