Financial Daily from THE HINDU group of publications
Wednesday, Apr 12, 2006
Financial Daily from THE HINDU group of publications Wednesday, Apr 12, 2006 |
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Regulatory Bodies & Rulings Money & Banking - Public Sector Banks Industry & Economy - Human Resources CVC rejects Ministry's request to review control over PSB officials Sarbajeet K. Sen
CVC feels that allowing more officers outside its purview would not be in the overall interest of the functioning of PSU banks.
New Delhi , April 11 The issue of freeing more top public sector bank officers from the purview of the Central Vigilance Commission's (CVC) jurisdiction appears to have been finally set to rest with the Commission firmly rejecting the request to review its jurisdiction over the state-owned banks. The CVC's firm no to a recent follow-up request by the Banking Division of the Finance Ministry means that the present system would continue where officers from scale-V and above are within the CVC jurisdiction.
Autonomy package
As part of its ongoing managerial autonomy package, the Finance Ministry had suggested that officer of scale-V (the layer below board-level officials) should also be taken out of the CVC's purview and that disciplinary action for their misdemeanours should be handed over to the respective bank boards. There have been several rounds of correspondence between the two sides on the issue.
Govt ownership
However, it is understood that the CVC feels that allowing more officers outside its purview would not be in the overall interest of the functioning of PSU banks because their majority Government ownership should have a high level of accountability.
Lending activity
The Finance Ministry made the request to the CVC with a view to ensure that lending activity by the senior officers of banks is conducted without fear of being questioned by the investigative authorities. This had also been a persistent demand from the banking industry itself. Agreeing with the bankers, the Government had pushed the proposal that would have led to a level-playing field for public sector banks with the private sector counterparts in lending issues.
Ministry's argument
The Ministry of Finance has argued that bankers being part of commercial organisations should be allowed to take decisions without the fear of outside agencies since the executives are often required to take risks for the purpose of business growth. In the past, it had often been alleged that decisions taken in good faith by bankers that had resulted in bad loans often landed them in trouble.
More freedom
While this specific plan on autonomy appears to be doomed, the Government has announced a series of measures in recent times to provide greater freedom to PSU banks to become completely board-run entities. Thus, barring a few issues such as appointment of CMDs and EDs, the banks have been given a whole range of new freedom such as to pursue new lines of business without the need to seek Government approval and deciding on human resources issues. Recently, the Government also allowed bank boards to appoint central statutory auditors.
Related Stories: More Stories on : Regulatory Bodies & Rulings | Public Sector Banks | Human Resources | Economic Offences
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