There is a need for greater oversight on banks, but overreach by probe agencies must be avoided, SBI Managing Director Arijit Basu said on Thursday. “…when you are working with public money you need to be overseen and you have to have a Central Vigilance Commission or a Central Bureau of Investigation, but there should not be overreach. I think the government also in the recent past has taken a lot of measures to assure the bankers,” Basu said.
With a view to protect prudent decision making of bankers, the government last month took a slew of decisions, including doing away with personal responsibilities of MD and CEO of public sector banks (PSBs) for compliance in dealing with large value frauds committed by bank officials.
Considering the complexities involved in the commercial decisions of managers in public sector firms, the Central Vigilance Commission set up the Advisory Board for Banking and Financial Frauds (ABBFF) for a mandatory first level examination on suspected frauds in excess of Rs 50 crore, involving public servants of GM rank and above, before investigations begin.
In order to boost staff morale and reduce scope for harassment, Finance Minister Nirmala Sitharaman had also directed PSB heads to clear long-pending vigilance cases against their officials for alleged malpractices.
The banks should form a panel headed by a general manager (GM) and it should either take decision to pursue the case with a timeline or close the file of long-pending vigilance cases, she had instructed.
Talking about the current levels of non-performing assets (NPAs), Basu said banks should have been cautious in some cases.
“There are two aspects to the reasons as to why this (non-performing assets) happened. One of them is rooted in the economy of the country…the other cause was the fact that when this was being done, there were certain accounts in certain cases where the banks should also have been much more cautious,” he said.
The gross non-performing asset ratio of commercial banks is seen rising to 9.9 per cent by September 2020 from 9.3 per cent as on September 2019, according to the baseline scenario in a macro-stress test conducted by the Reserve Bank of India.
Basu also said the worst is behind the banking sector in terms of NPAs.
“In a major way, the Insolvency and Bankruptcy Code has really helped us see that the ecosystem gets cleaned up. The legacy accounts, which were there, most of them have been addressed,” Basu said at the Times Now Summit here.
He further said the retail credit growth of SBI is seen at around 18 per cent.