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Wednesday, December 08, 2021

Govt soothes banks over harassment by CBI: ‘Won’t go after genuine decisions’

Notices will carry registration number, agency won’t take up suo motu cases.

By: ENS Economic Bureau | New Delhi |
Updated: December 29, 2019 7:54:37 am
cbi raids on banks, bank frauds, Nirmala Sitharaman, Nirmala Sitharaman on bank frauds, indian express news Sitharaman assured the bankers that a distinction would be made between genuine commercial failures and culpability. (File photo)

In an attempt to allay concerns of harassment by investigative agencies, the government on Saturday assured that honest commercial decisions taken by bankers would be protected and said that a system would be put in place for handling fraud cases.

Announcing a mechanism whereby notices issued by the Central Bureau of Investigation (CBI) to banks will carry a registration number to avoid any scope for unauthorised communication and consequent harassment, Finance Minister Nirmala Sitharaman said, “Banks have gone through a slightly worrying period wherein decision making was getting difficult because of fear of 3Cs (CBI, CVC, CAG). There was concern and bona fide decisions are not being made by banks because of what they would say undue harassment, uncalled for harassment happens because of these agencies pursuing on cases.”


Another step towards accountability

The move to build in more accountability while initiating investigative action against bankers follows up on an earlier step where the government had directed investigative agencies to carry out a preliminary examination to ascertain whether a case of bank loan turning into NPA was the result of a criminal conspiracy or a bonafide commercial decision. Over a dozen officials of commercial banks and the RBI are facing inquiries by the CBI and ED.

Sitharaman was speaking after a review meeting she held with heads of state-owned and private sector banks and attended by Central Bureau of Investigation (CBI) Director R K Shukla.

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The concept of a registration number with the agency’s notices is in line with a similar system of Document Identification Number (DIN) mandated by the tax department. This is aimed at preventing arbitrary issuance of notices by tax officials and to ensure audit trail of all such communications. Till November 11, 5.33 crore communications with DIN have been issued by the Income Tax Department.

It was also decided at the meeting that no case involving banks would go to the CBI without the banks themselves deciding to send it.

“No case, no case whatsoever, involving the banks goes to CBI without the banks themselves deciding to send it here. There is no suo moto case which the CBI takes against the bank. So, let’s be very clear in the understanding that banks have an internal committee, which look at fraudulent practices in certain accounts or certain cases and they have well-defined protocol for it,” Sitharaman said. “When the banks’ internal committee decides, only then it goes for information to the Reserve Bank. Post that, it gets referred to the CBI. And these are for Rs 3 crore or more (in value) suspicious fraudulent cases,” she said.

Sitharaman assured the bankers that a distinction would be made between genuine commercial failures and culpability. The government also suggested banks to adopt strict standards in appointing forensic auditors. The Indian Banks’ Association was asked to strengthen the forensic auditor empanelment process and tie up with the CBI for training forensic auditors.

It was also decided in the meeting that the CBI would create a dedicated phone number on which any person could give information regarding any undue harassment by the investigative machinery. Public sector banks would further be able to report instances of fraud through e-filing of FIRs to a designated email address of the CBI. The CBI plans to hold meetings and workshops together with bank officials in the next few months to explain various confusions and misgivings.

Banks were instructed to form committees, with officers at the level of general managers, to look at vigilance cases that have accumulated over several years and that are yet to be closed. Such cases will have to be pursued or closed, so that they don’t remain pending forever, the minister said.

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