Steps taken to protect bona fide decisions of bankers: FM Nirmala Sitharaman

State-run banks have been asked to revise their respective staff accountability and other relevant policies, as required, within this framework with approval of their respective boards, she informed the House. (File)

Finance minister Nirmala Sitharaman on Tuesday said the government has finalised a consolidated staff accountability framework for bad loan accounts up to Rs 50 crore and initiated a raft of other measures to protect bona fide commercial decisions of bankers and assuage their fears over any unwarranted hardships for taking key decisions.

In a reply in the Rajya Sabha, Sitharaman said these measures include amendments to the Prevention of Corruption Act (PC Act), 1988, requirement of prior permission before initiating investigation against a public servant, setting up of Advisory Board for Banking and Financial Frauds for first level of examination of suspected frauds of banks and financial institutions in excess of `50 crore and finalisation of Consolidated Staff Accountability Framework.

In consultation with Central Vigilance Commission, the government has finalised the staff accountability framework, which will come into force from April 1, 2022.

State-run banks have been asked to revise their respective staff accountability and other relevant policies, as required, within this framework with approval of their respective boards, she informed the House.

“The Staff Accountability Framework is aimed at protecting bona fide decisions taken by the bank officers/workmen while ensuring accountability for wrong doing or inaction. It is meant to identify and punish only those bank officers/workmen who are prima facie responsible for the lapses of non-compliance with laid down systems and procedures or misconduct and/or non-adherence to the ‘due-diligence’ norms,” she said.

Recently, Prime Minister Narendra Modi called on bankers to step up lending without fear, satiate the voracious credit appetite of a fast-recuperating economy and help spur growth. He offered to stand as a “wall” to defend those bankers who may commit honest business errors, amid fears that bankers were turning risk-averse. The assurance had come days after former SBI chairman Pratip Chaudhuri was arrested in an alleged loan scam case, drawing sharp protests from the banking community. Chaudhuri has now been granted bail.

Separately, responding to a question, minister of state for finance Pankaj Chaudhary told the Rajya Sabha that the central bank has raised concerns on “destabilising effect of cryptocurrencies on the monetary and fiscal stability of a country”.

Chaudhary also said India has been the best performing market in the post-Covid period compared to its Asian peers as well as MSCI Emerging Market index. “India’s higher growth potential and a vibrant technology sector with a number of new generation tech companies going public this year are giving India an edge,” he said. The current low interest rates in India, lack of availability of alternative saving/ investment avenues and the retail-investing boom in stock market could also be contributing to the high stock prices, he added.