The authorities is contemplating a proposal to grant better safety to senior executives of state-run banks, akin to the immunity loved by authorities servants, to protect them from simple arrests and harassment for “honest business errors” and encourage them to lend with out concern, official and banking sources advised FE.
One of the proposals being weighed goals to make sure that public-sector bankers are granted safety (like authorities officers) underneath Section 197 of the Code of Criminal Procedure (CrPC). This part prohibits the courts from taking cognisance of legal expenses towards authorities servants with out prior sanction of the competent authority.
“The finance ministry and the Indian Banks’ Association (IBA), which has been pushing for higher protection to bankers, are in talks on this issue,” mentioned one of many sources. Once the finance ministry endorses the proposal, it will likely be despatched to the ministry of regulation for vetting, he added.
Bankers say, based on extant pointers, to arrest senior officers of a PSB as much as the extent of common managers, the approval of the managing director of the financial institution is required. Similarly, the approval of the division of economic companies is required to arrest the MDs or govt administrators of PSBs. However, these pointers have typically been flouted by state police on one pretext or one other, which can solely change as soon as the safety is enshrined within the CrPC, they added.
The transfer to accord better safety to PSB workers on sincere industrial selections comes at a time when the federal government is nudging state-run banks to satiate the rising credit score urge for food of traders and assist spur financial progress. Following a spate of high-profile arrests in recent times, public-sector bankers really feel the extant mechanism has proved to be insufficient to curb arbitrary actions, particularly by native police. The arrests additionally prompted them to show extra risk-averse, which weighed on the broader credit score disbursement.
Having remained subdued over most a part of the final two years, credit score progress has improved in current months, and the federal government needs this momentum to speed up additional. Non-food financial institution credit score grew 9.7% in March, in contrast with 8% within the earlier month and 4.5% a yr earlier than. However, loans to trade grew at a slower tempo of seven.1% even on a marginally-contracted base.
The clamour for a extra sturdy safety mechanism grew shriller after former State Bank of India (SBI) chairman Pratip Chaudhury was immediately arrested by Rajasthan police in an alleged mortgage fraud case final yr, lengthy after his retirement, on the premise of a warrant issued by the Jaisalmer court docket. The allegations (labelled by defaulters) towards Chaudhuri included debtors’ properties value Rs 200 crore being bought for Rs 25 crore after SBI had seized them for non-repayment of the mortgage. The financial institution bought the properties to Alchemist Asset Reconstruction Company a very good six months after Chaudhuri had retired. SBI defended its former chairman. Chaudhuri obtained bail, however not earlier than 8-9 days.
Similarly, in 2018, Bank of Maharashtra chief govt Ravindra Prabhakar Marathe, his predecessor and different high officers had been arrested in a Rs 2,043-crore mortgage fraud case. However, inside about 4 months, the Pune police filed a closure report for lack of proof.
To discourage such actions, the division of personnel & coaching, in a round in September 2021, stipulated normal working procedures for tackling circumstances underneath Section 17A of the Prevention of Corruption Act (PCA). The round says any police investigation on selections taken by public servants whereas discharging their duties would require prior approval from the competent authority. In truth, Section 17A was inserted within the PCA in July 2018. Still, these measures didn’t cease the arrests of bankers by state police.
“Despite good intention and the support for bankers announced by the central government, bankers are still being hounded, mainly by state police. Moreover, it is observed that senior bankers are targeted, often by defaulters, after their retirement. All these have to stop,” mentioned the manager director of a state-run financial institution.
Late final yr, the federal government finalised a consolidated workers accountability framework for dangerous mortgage accounts as much as Rs 50 crore. The framework, which got here into drive on April 1, 2022, is supposed to establish and punish solely these financial institution officers who’re prima facie answerable for the lapses or non-compliance of laid-down procedures or misconduct and/or non-adherence to the “due-diligence” norms.
Source: www.financialexpress.com”