These guidelines shall be implemented with effect from April 1, 2022, for accounts turning non-performing assets (NPAs) beginning next financial year.
The department of financial services (DFS), under the finance ministry, “vide its order dated October 29 advised broad guidelines to be adopted by all public sector banks (PSBs) on ‘Staff Accountability Framework for NPA Accounts up to Rs 50 crore’ (Other than Fraud Cases)”, the Indian Banks’ association (IBA) said in a statement.
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, it said.
The IBA, being a key stakeholder of the framework, was involved in the process right from the beginning.
These guidelines will help quell apprehension that bankers could be hauled up for their bonafide commercial decision go wrong. It will also help banker to take credit decisions faster and help support economy.
Stressing that the new guidelines will surely boost the morale of the PSBs employees immensely, it said banks will have to complete staff accountability exercise within six months from the date of classification of the account as NPA.
Further, it said that depending on the business size of the banks, threshold limits have been advised for scrutiny of the accountability by the chief vigilance officer (CVO).
Past track record of the officials in appraisal or sanction/ monitoring will also be given due weightage, it added.
“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 into NPA. This approach not only adversely affects staff morale but also puts a huge strain on the bank’s resources,” it said.
While punitive action needs to be taken against the officers having malafide intent/involvement, it is essential to ensure that bonafide mistakes are dealt with compassion, IBA said.
It added that there is a need to protect the people taking bonafide business decisions in this competitive environment.
Moreover, IBA said that 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 lakh or Rs 20 lakh depending on their business size for the need of examining the aspect of staff accountability, it said.