Ministry of Finance publishes uniform accountability standards to protect bankers’ good faith decisions

NEW DELHI: To protect people who make good faith business decisions, the Ministry of Finance has issued a uniform staff accountability framework for NPA accounts up to Rs 50 crore.
These guidelines will be implemented from April 1, 2022, for non-productive assets revolving accounts (APM) from the next fiscal year.
The Department of Financial Services (DFS), under the Ministry of Finance, “since its decree of October 29 has advised general guidelines to be adopted by all public sector banks (PSB) on the” staff accountability framework for accounts Postcode up to Rs 50 crore “(Other than fraud cases),” the Indian Banking Association (IBA) said in a statement.
Banks have been urged to revise their staff accountability policies based on these broad guidelines and to frame the procedures with the approval of the respective boards of directors, he said.
The IBA, being a key stakeholder in the framework, has been involved in the process from the start.
These guidelines will help allay the apprehension that bankers could be arrested because their bona fide business decision goes wrong. It will also help bankers make faster credit decisions and support the economy.
Noting that the new guidelines will surely boost PSB employee morale tremendously, he said banks will need to complete the staff accountability exercise within six months from the date the account is classified as NPA.
In addition, he said that depending on the size of the banks’ business, threshold limits have been recommended for the scrutiny of liability by the Chief Vigilance Officer (CVO).
The background of officials in terms of assessment or sanctioning / monitoring will also be duly taken into account, he added.
“Right now, different banks follow different procedures to conduct staff accountability exercise. In addition, the exercise of staff responsibility is carried out with respect to all accounts that turn into NPA. This approach not only affects staff morale, but also puts enormous strain on the bank’s resources, ”he said.
While punitive action should be taken against officers with bad faith intent / implication, it is essential to ensure that good faith errors are treated with compassion, IBA said.
He added that there is a need to protect people who make good faith business decisions in this competitive environment.
Further, IBA said that at a time when the country is in need of an economic boost, the slowness of lending to industries due to fear of involvement is a matter of concern and should. be resolved urgently.
Banks with the approval of their board of directors may decide on a threshold of Rs 10 lakh or Rs 20 lakh depending on the size of their business for the need to consider the aspect of staff accountability, a he declared.

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