cvc: bank frauds over Rs 3 crore will need a nod for the CBI investigation

NEW DELHI: The Central Vigilance Commission (CVC) changed the rules to require that all cases of bank fraud over Rs 3 crore be referred to a panel of experts to decide whether an investigation by the Central Bureau of Investigation (CBI) is justified in what is seen as yet another attempt to comfort the bankers. Previously, only cases of fraud over Rs 50 crore at public sector banks were referred to this panel.
Separately, the bankers approached the finance ministry asking for a “sunset period” for investigations so that they are not hounded by investigative agencies for real business decisions. They suggested that agencies, such as CBI and CVC, should be barred from reviewing cases if a loan account remains standard for seven or 10 years.

“There may be problems due to the current state of the economy or a particular industry, or a company’s product may become obsolete over time. But if there are no problems for a number of years, then there is no need to go on a witch hunt, some of which comes after retirement, ”said one banker.
While the Department of Financial Services (DFS) has yet to act on this, it has agreed, along with RBI and CVC, to change the rules in fraud cases. The move comes at a time when bankers have repeatedly raised new concerns about what they believe is a three-C overrun – CVC, CBI and India’s Comptroller and Auditor General. In the past, they have cited these concerns for slow sanctioning of loans, although Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman have on several occasions offered their full support to genuine business decisions.
In a circular issued last week, CVC said that based on discussions with RBI and the Ministry of Finance, the Advisory Board for Banking and Financial Fraud (ABBFF) will review the role of all full-time executives and directors ( in service and retired) in cases of Rs 3-50 crore classified as fraud by state-run public sector banks and financial institutions on or after January 6. Cases reported before the January 6 deadline will be referred to the panel if they have reached disciplinary authority or when criminal cases are yet to be filed.
While CVC said a separate board for cases between Rs 3 crore and Rs 50 crore will be put in place, bankers said quick decisions were needed as the number of cases referred to ABBBF will now increase multiple times.
In the past, banks have responded by classifying a large number of cases as fraud to ensure that management does not face further action.

Shawanda H. Saldana