The rising non-performing assets (NPAs) in public sector undertaking (PSU) banks cannot be controlled unless there are changes in the regulation for fixing accountability of top management, says a bank employees' union.
"The chairman and managing directors (CMDs), executive directors (EDs) and chief executives (CEOs) of PSU banks are President Appointees. Hence, no action can be taken against them or hold them accountable for their wrong doings. This provision enables them to take decisions in sanctioning of loans. If the loans are defaulted these CMDs or EDs or CEOs are not held accountable for the NPAs. Unless and until mandatory provisions are made in rules for fixing accountability of them, NPA problem will never end," says Subhash Sawant, General Secretary of Indian National Bank Employees' Federation (INBEF), the banking wing of INTUC (Indian National Trade Union Congress).
He alleged that such provisions are deliberately not being made by the Ministry of Finance as it will affect the loan sanction where politicians are interested. Sawant has been actively raising his voice against the rising NPAs in public sector banks (PSBs) and its inept handling by the bank officials for many years. His relentless battle in the past exposed the dubious dealings of Central Bank of India’s former chief Homai Daruwala.
On 4 November 2010, Sanjeev Kumar Jindal, the then Director for Vigilance in the Finance Ministry wrote to the Secretary of Public Sector Enterprises Board (PSEB), which stated, "Provisions regarding taking disciplinary action in respect of heads of Public Sector Enterprises are governed by Nationalised Banks (Management & Miscellaneous Provisions) Scheme 1970/80. These provisions do not have any provision for initiation of disciplinary proceedings against CMDs and EDs, who are Presidential appointees, except removal from the service of the bank after following due procedure. In case an officer is found guilty of any misconduct and in the meantime he retires from the Board, Department has no option but to issue a 'displeasure' which may not serve any purpose."
This provision allowed Central Bank of India’s the then CMD Daruwala, who was accused of violating several guidelines, walk free with just a ‘letter of displeasure’. The case with the Central Bank of India CMD is not a one-off; there have been several other instances where bank heads have committed white-collar crimes, only to be let off without as much as a rap on the knuckles.
Commenting on the existing legal provisions, Sawant had said, "The present system allows corrupt high-level bank officials to go scot-free. There is absolutely nothing that can bring them to book. Up to the level of general manager, the particular bank's service regulations come into force, where provisions for disciplinary action are available. However, positions of CMD and executive director do not fall under these rules, as they are appointed by the president of India. Even if investigations are carried out, these officials escape during court proceedings, due to lacunae in the regulations. It is my firm opinion that these people be brought under the purview of some law."
Earlier on 10 December 2014, the INBEF had filed a public interest litigation (PIL) in Bombay High Court about rising NPAs in public sector banks. On 22 March 2016, the HC directed the central government, finance ministry, RBI and Central Vigilance Commission (CVC) to treat the PIL as a representation made by CBEU and take necessary decision as per the law. The HC also directed them to convey the decision to the bank employee union within three months. These three months would end on 22 June 2016 and we hope that the authorities will take right decision, says Sawant.
In March 2016, INBEF held a dharna at Jantar Mantar in New Delhi for several long pending demands as well as for introducing an agriculture loan restructuring policy for farmers. Prashant Bhushan, senior counsel at the Supreme Court, while congratulating INBEF for taking up the issue of the recovery of NPAs of banks, criticised functioning of the government, particularly, in the banking sector.