PSBs to introduce common staff accountability guidelines for NPAs

Loans up to Rs 50 cr t be brought under new regime, fraud accounts to be kept out of ambit; aim is to reduce hardship to employees, save resources

Public sector banks will implement common staff accountability policies for loan accounts up to Rs 50 crore, excluding fraud accounts, turning into non-performing assets (NPAs) on or after April 1, 2022.

This is expected to ensure a common approach across state-owned banks in dealing with staff accountability for accounts becoming NPA and save employees for undue hardships.

The finance ministry had advised on broad guidelines (revision) to be adopted by all PSBs. Banks should revise Staff Accountability Policies based on these broad guidelines and frame the procedures with approval of the respective boards.

Indian Banks’ Association in a statement said that at present, different banks are following different procedures for conducting staff accountability exercises.

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.

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. There is a need to protect the people taking bonafide business decisions in this competitive environment, IBA said.

This issue needed urgent attention at a time when the country is in need of an economic boost and delivery to credit to industries is slow due to the fear of implication.

Banks with the approval of their Board may decide on threshold of Rs 10 lacs or Rs 20 lacs depending on their business size for examining the aspect of staff accountability.

The new guidelines will surely boost the morale of the PSB employees immensely. Banks will have to complete staff accountability exercises within six months from the date of classification of the account as NPA.

Further, depending on the business size of the banks, threshold limits have been advised for scrutiny of the accountability by the Chief Vigilance Officer. Past track record of the officials in appraisal, sanction and monitoring will also be given due weightage, IBA added.