New norms to protect bonafide decision of bankers

Mumbai: Union Ministry of Finance in its order dated October 29 has advised broad guidelines to be adopted by all PSBs on 'Staff Accountability Framework for NPA Accounts up to Rs50 crore (Other than Fraud Cases). Banks have been advised to revise their Staff Accountability Policies based on these broad guidelines and frame the procedures with approval of the respective boards. These guidelines shall be implemented on April 01 for accounts turning NPA on or after that date.

At present, different Banks are following different procedures for conducting staff accountability exercise. Also, staff accountability exercise is being carried out in respect of all accounts which turn NPA. This approach not only adversely affects staff morale but also puts a huge strain on the Bank's resources. While punitive action need to be taken against the officers having mala fide intent/involvement, it is essential to ensure that bona fide mistakes are dealt with compassion. There is a need to protect the people taking bona fide business decisions in this competitive environment.

Also, at a time when the country is in need of an economic boost, slow credit delivery to industries due to the fear of implication, is a matter of concern and needs urgent address. Banks with the approval of their Board may decide on threshold of Rs 10 lakhs or Rs 20 lakhs depending on their business size for the need of examining the aspect of staff accountability.

The new guidelines will surely boost the morale of the PSB employees immensely. Banks will have to complete staff accountability exercise within six months from the date of classification of the account as NPA. Further, depending on the business size of the banks, threshold limits have been advised for scrutiny of the accountability by the CVO. Past track record of the officials in appraisal/sanction/monitoring will also be given due weightage.