Small bad debts are big, fix accountability: CVC to PSBs

The Central Vigilance Commission (CVC) has asked public sector banks (PSBs) to fix accountability for small loans that turn into non-performing assets. The CVC, after an audit of some PSBs, has written to the chiefs of the banks that a cut-off amount was fixed and there was no accountability below that level. The letter was sent late last month.

“Banks need to have an effective mechanism to not only examine accountability but also monitor whether accountability has been examined promptly. Further, there should not be any cut-off limit for fixing accountability as liability in an individual loan account may be small but collectively the amount involved could be much higher,” said the CVC.

Most of bank NPAs are on account of high-value loans extended to companies. The CVC said there were considerable delays in detection and classification of NPAs and also in fixing responsibility. Besides, it said, in many cases, an absence of “effective monitoring” was observed.

Often, the CVC said, chief vigilance officers (CVOs) of banks did not receive vital information on aspects such as quick mortality accounts, letters and reports from internal inspection and audit teams, and details of one-time settlements.

Further, information on fixing accountability of accounts that turned into NPAs was also not received by the CVOs. The CVC also pointed to the quality of investigations and charge sheets by banks and asked them to improve the process.

The CVC audit revealed that vigilance officers posted in zonal and branch offices of many PSBs were not full-time functionaries and asked them to ensure deployment of adequate number of personnel.