Banks may extend legal, financial support to staff in case of probe by inquiry agencies

Indian banks are planning to extend legal and financial support to existing as well as retired members of their staff who come under the scanner of investigative agencies like the Central Bureau of Investigation (CBI), according to a report by The Economic Times. 

The move comes in the light of several ongoing probes by various agencies on bank officials such as Chanda Kocchar for alleged wrongdoings while in office. These investigations have made bankers, even those who have hung up their boots, quite nervous.

In a letter to bank chiefs, the Indian Banks' Association (IBA) had proposed that banks will pay for all legal expenses like court fee, lawyers' fee, transportation and cover other miscellaneous costs. These expenses would be borne by a bank even if an employee resigns, retires, or is transferred to another location.

The IBA's communique was shared with all bank CEOs on August 1, along with all the particulars including what kind of cases will be covered under the proposal, and the extent and nature of assistance to be given. It had already been approved by IBA's managing committee.

The bank managements' body said that the concerned bank will also arrange for a lawyer when an employee (even one who has retired) is summoned by the CBI or police for interrogation. It also said that a bank would have the liberty to hire a top-notch lawyer to defend an employee, depending on the facts of the case.

"…It was felt that there is a need to introduce a comprehensive scheme for extending legal and financial support to employees including ex-officers and also present directors of the banks covering instances where the prescriptions have been launched by the government agencies when carrying out their normal duties," the IBA said in its letter.

The industry body proposed that banks will take urgent steps to avoid the arrest of their staff, present or former, by seeking anticipatory bail. In case of arrest, banks will take steps to ensure that bail is granted as soon as possible.

"It's the need of the hour...A fear psychosis has gripped the entire banking industry. Nobody wants to lend. No one wants to settle a bad loan. If the government can’t rein in its enforcement agencies, banks have to join hands to defend themselves. IBA’s August 1 letter to all bank CEOs outlining the scheme is a positive and reassuring move," a retired banker told the paper.

The concerned banks would also give similar support to enable employees to defend themselves against civil or criminal cases filed by defaulters, as well as ensure that an arrest following criminal proceedings against a defaulter is not treated as a black mark on the performance of affected employees.

"This would facilitate the bank's process of identification and declaration of wilful defaulters," the IBA said in the letter, adding that the move would also instill confidence and a sense of security in the minds of employees.