Circular No. GS: 2009: 009              Date: 16.07.2009
TO ALL OFFICERS               PLEASE CIRCULATE
Dear Friends,
We reproduce hereunder the Circular No. CIRCULAR/GS/2009/09 dated 14-07-2009 received from our Federation for your information.
With best regards
Yours sincerely
(C.A. MALLIKARJUNA RAO)

GENERAL SECRETARY
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“We reproduce hereunder the communications received from AIBOC for your information
ACCOUNTABILITY AND VIGILANCE PROCEEDINGS
We have addressed a letter to IBA expressing our resentment to the vigilance guidelines issued recently by the Central Vigilance Commission to the Public Sector Banks, wherein stringent measures for improper handling of Non-performing assets are suggested, thereby tightening the noose of accountability concept around the necks of officers. Our communication addressed to IBA given hereunder is self explanatory. Further developments will be informed to you.”
“ACCOUNTABILITY AND VIGILANCE PROCEEDINGS
We draw your kind attention to the recent guidelines issued by the CVC to the Public Sector Banks, wherein we understand that, the Commission has pointed out the following:
a) Considerable delays are noticed in detection and classification of NPAs and also in fixing responsibility. Banks need to have an effective mechanism to not only examine accountability but also to monitor whether the accountability has been examined promptly.
b) Functioning of the internal advisory committee in some banks is not found to be satisfactory and it generally tends to take a lenient view and is not realistic and objective at times.
c) Complaints of any nature, particularly those having clear vigilance overtones received at the administrative offices are not forwarded to the CVOs or vigilance Department at the Bank headquarters, Vital information related to fixing of accountability in respect of accounts slipping into NPAs is also not being sent to the CVOs.
d) There should not be any cut-off limit for fixing accountability as liability in an individual loan account may be small but collectively the amount involved could be much higher.
e) Banks should devise a structured format for monitoring the fixing of accountability and selective examinations of such cases.
f) The Central vigilance is not satisfied with the way Public Sector Banks keep vigilance on non-performing assets (NPAs).
OUR VIEWS
These guidelines have far-reaching implications, which may affect the morale of the Officers working in Banking Industry.
In these days of acute competition the Banks are vying with each other to grab the major chunk of business potential and every Bank has resorted to aggressive posture as far as lending is concerned. In the process of granting loans on a large scale, a few accounts may turn out to be bad, not because the appraisal of the party’s proposal was not correct, but because of many external factors. The credit decisions will be based on the party’s performance in the past, their net worth, the current trends in business, the future potential for business, the market report on the party’s capacity, character etc. Even the most bonafide decisions may go haywire and the account may slip into NPA.
Each proposal has an element of commercial and business risk. Under such circumstances whether the sanctioning authority should be penalized?
It is pertinent to note here the following points:
(i) The marketing strategies have undergone very substantial changes keeping in tune with the competitive environment prevailing in the industry which calls for an aggressive approach in the Bank.
(ii) The discretionary powers of the officials have widely enlarged with flexibility in regard to the processing, sanctioning and follow-up of loan portfolios in tune with the current market environment to ensure the business growth of the Bank.
(iii) The Banking Industry has undergone a thorough change; aggressive marketing of business and competition which now exists in the Banking Industry, have replaced the earlier conservative approach. These are coupled with the unimaginable expectations of the Management with regard to the targets fixed from time to time.
In view of the foregoing situation, there is a need to take a practical and pragmatic view of the factors leading an asset to become a NPA. The causative factors need to be studied as to why an asset gets stressed. The bonafide decisions taken by the officers deserve a practical consideration. It is a well known fact that many credit decisions taken at the Board level also have slipped in to NPA and whether the accountability concept is applied with the same force in these cases too? Unfortunately, it is not happening and it is only the officers down the line who are brought in the ambit of disciplinary proceedings, which has caused deep frustration, fear psychosis, demoralization among the officers. This has stunted the efforts of the officers in considering even good, and quality borrowal accounts.
The guidelines issued by the Central Vigilance Commission are certainly retrograde and if implemented without thought, will have far reaching adverse impact on the morale of the officers. It is to our knowledge that officers with impeccable track records have been charge-sheeted in view of the stringent vigilance instructions. There is a need to create an atmosphere where officers can work without fear and in tune with the policy guidelines issued by the respective banks. We very strongly feel that all the above issues need to be discussed in a threadbare manner. We request you to arrange a meeting with us at the earliest, so as to enable us to present our views on the vigilance guidelines or instructions to the Public Sector Banks. Otherwise, it may go against the vigilance guidelines in a special chapter for Banks that a single bonafide mistake of an officer cost him his life time achievements.
We also would request you to take up with the Central Vigilance Commission and convey our strong resentment to the guidelines issued by them recently. Implementation of the guidelines may please be kept in abeyance.
We request you to treat this as most urgent.”
Yours sincerely,
sd/-
(D.S. BHADAURIA)
GENERAL SECRETARY