Suspected large bank fraud cases to be examined by the panel prior to the investigation

All major alleged bank fraud cases will need a panel analysis before lenders agencies such as the Central Investigation Bureau (CBI) take action. The system has been designed to allow bankers to take decisions without thinking about credit flows and release them, a top government official told ET.
The Central Vigilance Commission (CVC) has established the planning board on banks and financial frauds to find grievances against bankers in consultation with India's Federal Reserve Bank (RBI) and Niti Aayog. Former vigilance commissioner TM Bhasin will be heading this.

The five-member board will act because first level of scrutiny for all suspected cases of fraud involving Rs 50 crore or more and head or higher rank executives will operate. Within a month, the Board will select matters.
This is being done to make sure that banks lend with none fear,” the official said. “Bankers are apprehensive of coming under the glare of investigative agencies for even a bonafide decision going wrong.”

The idea behind the move is to ringfence such executives and ensure there's no curtailment in credit flow for fear of enquiries afterward . Even the investigating agencies are going to be required to refer cases they are available across for review by the panel before taking any action.
The idea behind the move is to ringfind these managers to ensure that there is no curtailment of credit flow due to fear of subsequent inquiries. Even the investigative agencies will be expected to refer cases which are open to the panel for consideration before any action is taken.

Bank credit last year rose by 7.1 per cent, the second slowest in the last decade.


The move comes close on the heels of finance minister Nirmala Sitharaman sending a robust message to banks to lend without worrying about the "three Cs" at a meeting last month to which the CBI director also attended for this fraud. It applies to India's CBI, Controller and Auditor General, and hence, the CVC.

Sitharaman had told bankers that it would make a distinction between legitimate commercial failure and bank-led intentional wrong doing.


PSBs (public sector banks) shall refer all matters of suspected fraud involving amounts of cash exceeding Rs 50 Crore for public servants equal in rank to the general managers. If involving an employee who is working in PSBs or public financial institutions above the rank of head requires the notification of an inquiry agency during investigations, they must refer the board's interest for advice before going further, it said.

State supervisory bodies are also advised to follow an analogous arrangement or to refer the board's interest in matters relating to the provisions of the central act that the Prevention of Corruption Act applies to matters within their respective jurisdiction during a harmonious and consistent process, the CVC stated.


The newly formed board must pick its internal procedures and keep the commission updated on a quarterly basis about its operations, the CVC said, adding that the guidelines will apply in all cases of bank fraud henceforth.