The Central Vigilance Commission has started withdrawing from the banking sector, albeit slowly.
The government has issued a notification limiting the jurisdiction of CVC to assistant general manager (Scale V) and above in public sector banks as against the present coverage of a senior manager (Scale III) and above.
As a result, the number of officers coming directly under the purview of CVC will drastically come down from over 43,500 to about 4,500.
This move is expected to improve the functioning of public sector banks at all levels and take away fear psychosis in lending operations.
For vigilance cases involving chief manager (Scale IV) and below, CVC has now left it to individual banks to have their own internal vigilance management. CVC will thus move away from micro-management to off-site surveillance through periodical vigilance audits.
The CVC is in the process of streamlining its operations. It will soon issue a detailed guidelines on checks and balances in the financial sector.
The focus will be on greater internal system of banks and CVC will discourage them to refer cases to the commission. On an average between 3,500 to 4,000 cases are referred to the CVC annually.
At present the officers in the middle management/senior management/top executive grades in the PSU banks live in the perennial fear that they may be hauled over the coals if the credit decisions taken by them were to go awry.
In fact, the situation has come to such a pass that not taking credit decisions assures one of faster promotions than taking decisions, said one banker.
The revised guidelines, which are on the anvil, will cover definitional, jurisdictional and operational changes envisaged in Vigilance Management in public sector banks.
Indian Banks' Association chairman V Leeladhar said that with greater responsibilities cast on public sector banks, they will have to ensure that their own internal vigilance machinery is appropriately strengthened to meet the expectations of CVC.
Central Vigilance Commission and banking division of the Ministry of Finance, on a representation made by the IBA, had reviewed the entire gamut of vigilance management and made far-reaching changes in the powers and functions of the CVC in relation to public sector banks.