New Delhi: The Central Vigilance Commission (CVC) has set up the Advisory Board for Banking Frauds, headed by former vigilance commissioner TM Bhasin, to examine bank frauds of over Rs 50 crore and recommend action, in line with Finance Minister Nirmala Sitharaman's call for protecting honest decision-making.
This development will instill a sense of protection among bankers from prosecution for genuine decisions and promote lending. It will decide whether the case is a criminal act or a genuine commercial decision and accordingly, recommend the future course of action.
When asked about the move of the anti-corruption agency, Finance Secretary Rajiv Kumar said this will enable bankers to take genuine and commercially prudent decision without fear. The panel in its previous avatar was called the 'Advisory Board on Bank, Commercial and Financial Frauds'.
The advisory board, formed in consultation with the Reserve Bank of India, would function as the first level of examination of all large fraud cases before recommendations or references are made to the investigative agencies by the respective public sector banks (PSBs), the CVC said in an order.
The four-member board's jurisdiction would be confined to those cases involving the level of officers of general manager and above in the PSB in case of allegation of fraud in a borrowal account, it said.
Lenders would refer all large fraud cases above Rs 50 crore to the board and on receipt of its recommendation or advice, the bank concerned would take further action in such matter, it said. "(The) Central Bureau of Investigation (CBI) may also refer to any case or matter to the board where it has any issue or difficulty or in technical matters with the PSB concerned," it said.
Other members of the panel are former urban development secretary Madhusudan Prasad, former director general of the Border Security Force DK Pathak and former MD and CEO of Andhra Bank Suresh N Patel. The tenure of the chairman and members would be two years, the order said.
It further said the board will also periodically carry out frauds analysis in the financial system and give inputs for policy formulation related to the fraud to the RBI. The central bank will provide required secretarial services, logistic and analytical support along with the necessary funding to the board headquartered in Delhi.
To check such incidences, the government has already issued the 'framework for timely detection, reporting, and investigation relating to large-value bank frauds' to PSBs, which makes it clear that all accounts exceeding Rs 50 crore, if classified as an NPA, should be examined by banks from the angle of possible fraud. The framework also said that a report be placed before the bank's Committee for Review of NPAs based on the findings of the investigation.
On August 23, Sitharaman said the CVC had issued directions for the setting up of an internal advisory committee in banks to classify possible fraud cases as 'vigilance' and 'non-vigilance' and to support decision-making, and prevent harassment for genuine commercial decisions by bankers.
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