Banks get RBI, govt support on need to check overt vigilance

Lending support to bankers feeling constrained by overt vigilance by various agencies, RBI today said they should not be hauled up for 'bonafide mistakes' and the government needs to protect them to fast-track financial decision making.
"The bona fide mistakes made by the bankers while taking commercial decisions should be protected by the Government. If the officers are hauled up for such decisions this would lead to delay in good decisions because of avoidance of risk," RBI Governor Raghuram Rajan said at the two day bankers' retreat here today.
Financial Services Secretary Hasmukh Adhia also said that "they (bankers) are saying there is too much of constraints of all these agencies keeping an eye on them".

"I think accountability is already there," he said at the end of a two-day bankers' retreat here.
Adhia said there are a lot of agencies like the Central Vigilance Commission, Comptroller and Auditor General of India, the Right to Information Act which are overseeing the work done by bankers, but there is enough in the system itself to check any misdoing.
After the emergence of recent scandals, many bankers have been privately complaining about the disincentive to work because of the regulatory gaze out of fear that a decision could haunt them later.

Some experts have called the CVC, CAG and the CBI 'a troika of three Cs' which can cause trouble in the future and in some cases, also hurt retirement benefits.

Many corporate leaders had also voiced their concern about a so-called inertia or 'policy paralysis' in the working of the previous government.
At the retreat, bankers also requested the government to stregnthen and ensure implementation of legal framework like the DRT and SARFESI Acts.
The banks also sought full empowerment on their human resources decisions including those related to recruitment, consequence management changes and compensation, among others.
Bankers also gave a commitment that they will strengthen risk management internally, including by putting in place rule -based underwriting for small ticket loans.