The finance ministry has backed Prime Minister Narendra Modi’s promise to state run banks, assuring them that the government would not interfere in their commercial decisions and transfers and postings.
“The banks and financial institutions should take all commercial decisions in the best interest of the organisation without any fear or favour … No such decision should be taken out of any other extraneous considerations such as the influence or the position that the borrower is holding,” said a missive by the department of financial services to chiefs of all public sector banks.
At the Gyan Sangam or brain storming session held last week in Pune, Prime Minister Narendra Modi had promised state run lenders that the government would not interfere with their functioning.
The finance ministry has, however, said that each bank must have a clear objective (for commercial decisions) as well as a well laid out transfer policy, which should be followed strictly.
“No exception should be made in such rules at the behest of any recommendation given by anyone including anybody from the ministry of finance. If for genuine reason, any exception to the rule is made, it should be done only by the chairman and managing director (CMD) by giving proper reasons,” said the missive.
But warning public sector banks against misusing this freedom, the finance ministry has further said, “The freedom given to banks and financial institutions will be used in the most objective way….if any complaint comes to the (financial services) department from anybody informing that exceptions were made in certain cases without any objective basis, and in order to favour somebody, the person taking such decision would be accountable.”
It has also advised banks and financial institutions to set up a robust grievance redressal mechanism for borrowers, depositors and the staff.