Preventive vigilance more effective than punitive one: RBI Governor

RBI Governor Urjit Patel on Thursday said that preventive vigilance is the most effective governance mechanism at public sector institutions as opposed to punitive and detective vigilance.

Delivering a lecture at the Central Vigilance Commission (CVC), he said punitive vigilance is difficult in a public sector institution for several reasons including demotivating employees.

"The rewards are low, to start with, thereby limiting the possibility of downward revisions. Given this constraint, disciplinary actions that limit the chances of career progression are often the preferred punishment.

"However, this has the misfortune of demotivating employees beyond the point of their career when punitive vigilance action is undertaken," Patel said.

He said while it is possible to fine-tune pecuniary incentives and career-based rewards for greater effectiveness, their "bite" is not as strong as in the private sector.

He added that detective vigilance too was rendered somewhat ineffective in the public sector "as detection does not lead to punitive outcomes", except in extreme cases and over time.

"...Investment in detective vigilance does not guarantee the desired reduction in incidence of lapses, even though it might help in some cases arrest the slide and contain with remedial measures," he said.

Hence, preventive vigilance takes centre stage and becomes a key effective tool of governance in a public sector institution, the RBI Governor said.

"When lapses can arise due to background noise outside of the employee control, punitive vigilance becomes even less attractive due to further demotivation that it might induce; in turn, so does detective vigilance.

"In other words, while not taking away from the need to engage in some detective and punitive vigilance, preventive vigilance is conceptually likely to be the most effective governance mechanism at public sector institutions," Patel said.

--IANS

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