Govt flays lobbying for top posts at PSU banks-LiveMint-19.12.2014
( read my comment given below)
In a circular issued to banks, financial institutions and insurance firms, the department has warned officials against making unauthorized visits
New Delhi:
The finance ministry is keen to discourage lobbying for top posts in state-owned banks.
Even as it is finalizing appointments for top posts in state-run banks, the department of financial services has moved to restrict the entry of bank officials to its premises.
In a circular issued to banks, financial institutions and insurance companies last week, the department has warned officials against making unauthorized visits.
Since the government owns a majority stake in state-run banks, officials from such banks are regular visitors.
“The department has been witnessing large scale unauthorized and irregular visits by officials and employees of banks, financial institutions and insurance companies in the recent past… It has also been reported that some bank/financial insurance officers have attempted to reach out to DFS officers in the hope of seeking personal favour,” the circular said.
Mint has reviewed a copy of the circular.
The finance ministry is in the process of finalizing appointments of bank chiefs in state-run banks and will start the process of appointing executive directors in state-run banks towards the end of this month.
These appointments have come under scrutiny after Syndicate Bank’s chairman and managing director S.K. Jain was arrested in a bribes-for-loans scam and the Central Bureau of Investigation (CBI) has since widened its enquiry to UCO Bank and Bank of Maharashtra.
Subsequently, the finance ministry scrapped the appointment process started by the previous United Progressive Alliance (UPA) government and initiated a fresh appointment process.
The government is currently in the process of appointing chairmen and managing directors at eight state-run banks.
The government is also expected to conduct interviews for posts of executive directors for at least 14 positions.
The circular directed all officials to seek prior appointments and meet officials only above the joint secretary rank as far as possible, and only visit the ministry when they have legitimate work.
In the aftermath of the bribes -for-loans scam, finance minister Arun Jaitley promised to strengthen the governance practices at banks.
The finance ministry has proposed that only qualified people be appointed as independent directors.
It has also moved to separate the post of chairman and managing director and give fixed tenures to bank chiefs.
The finance ministry’s circular “indicates that it wants to stem lobbying and go about the appointment process in a (more) fair and transparent manner than what was followed in the past,” said an analyst at a broking firm who did not want to be identified.
The appointment of competent officials to the key posts would go a long way in improving the image of state-owned banks, this person added.
http://www.livemint.com/Industry/TilaYqxR5OooxxAzUFNyQN/Govt-flays-lobbying-for-top-posts-at-PSU-banks.html
My Comments
It is a good news for the health of public sector bank that Ministry of Finance has issued guidelines to stop frequent visit of several bank officials to Ministries and government departments to stop perhaps corruption in appointment, promotion, posting and sanctioning of loans to big corporate houses. Only God knows whether such guidelines will actually be put in effect in true spirit or not.
It is well known to all and open secret that majority of posting of top officials, promotion of officials and recruitment of officials in bank ,more often than not take place not on the basis of merit or performance but only on the basis of recommendations of some high profile dignitaries or on payment of some bribe to recruiter or panel members of Interview board which decides on matters related to promotions and who decides o files pertaining to posting and transfers of top officials directly or indirectly through some middlemen. Same culture percolates down in all banks where majority of promotion of officers from one scale to higher scale takes place on the recommendations of some VIP or the other or after payment of some bribe to person who can play positive role .Many high profile businessmen who have good liasoning with top officials of banks also play crucial role in promotion, posting and recruitment of bank officers and there is role of money in most of such cases.
I do not know good guidelines preaching sermons on ethics will swim or sink in banking system. Such guidelines swim in offices like banners or lost in air, Hardly one in thousand employees read it carefully. Such guidelines sink in files and rest dusted in some corners But it is bitter truth that such guidelines are issued periodically but never put in force .
It is important to mention here that each top management of each public sector bank has existing guidelines for bank employees not to use outside agencies or individuals to get favour in transfers , postings and promotions. But the culture of recommendation never stops and majority of posting and promotion takes place only on the basis of recommendation of some or the other top officials.
Similarly every year in the month of November , all bank staff has to take oath that they will not indulge in corrupt practice in execution of their day to day work and in sanction of loans and advances or in purchase of goods and services but everyone in India knows that majority of loans are sanctioned on the power of bribe and commissions only.
This is why I say that guidelines issued on ethics are normally ignored in all offices and they swim or sink in all offices. But I have no doubt that if corruption in promotion, posting and recruitment is reduced to Zero, health of Not only PS banks will increase , but bank staff will also be happier and customers of banks will get comfortable service.
In our country , it is culture to punish good staff ( they are denied wage hike) and award bad officers (who get promotion out of turn and who earn bribe and least bother for wage hike ). It is bad borrowers who are awarded by writing off of loans or by sacrificing interest and principle amount and good borrowers have to pay high interest or face court cases.
As such issuance of good guidelines is one thing and putting the same into effect is entirely a different story. Officers who have to use ministers and top officials for getting undue advantage in promotions and postings can approach the house of important officers and ministers with a flower bouquet and a packet of bribe money or by extending costly gifts on some ceremonial occasions where VIPs are wilfully and strategically invited to grace the occasion. There are several ways to oblige top officials and ministers or top politicians to get favour in corrupt way.
RBI steps up efforts to improve coordination with law enforcement agencies-Business Standard- 19.12.2014
Move aimed to prevent recurrence of Saradha-like chit fund scam
The Reserve Bank of India (RBI) is engaging with state governments across the country to prevent a recurrence of Saradha-like chit fund scam.
The banking regulator has held meetings with chief secretaries of states and is making efforts to improve coordination between regulators and law enforcement agencies for early identification of financial malpractices by some fly-by-night operators.
“Since the revelation of the financial mismamangement of some Ponzi schemes, there was a feeling that some of these entities are falling in the so-called regulatory gap. Since then we had a meeting of chief secretaries where we have urged them to make much better use of the state-level coordination committees. These committees should meet more frequently, at least four times a year,” RBI Governor Raghuram Rajan had said following the central bank’s board meeting in Kolkata last week.
A number of states, including West Bengal, have also created sub-committees under their state-level co-ordination committees.
“These are a sort of full-time contact points among the regulators and law enforcement agencies within the state. Then we can go quickly after some of these fly-by-night operators. There is now a much greater level of coordination as a result of our feeling that some of these entities were not falling within precise regulatory ambits,” Rajan added.
In April, 2013 Saradha Group, which was involved in an illegal deposit mobilisation scheme, shut shop. It had raised close to Rs 2,000 crore from over one million small investors in West Bengal alone. The company also had operations in other states including Odisha and Assam. After the scam came to light, the West Bengal state police arrested Saradha Group promoter Sudipta Sen and a few other key officials.
The Central Bureau of Investigation (CBI) has now taken charge of the investigation and arrested people with close links to the ruling Trinamool Congress (TMC).
West Bengal’s Transport Minister Madan Mitra, TMC’s Member of Parliament (MP) Srinjoy Bose, its suspended MP Kunal Ghosh, and the former director-general of West Bengal police, Rajat Majumdar, have been taken into custody so far.
The Supreme Court, which had given its go-ahead for the CBI probe in the Saradha chit-fund case, had questioned the role of regulators — the Securities and Exchange Board of India (Sebi), RBI and the Registrar of Companies — for their inaction in the multi-crore scam.
“Investigation conducted so far puts a question mark on the role of regulatory authorities like Sebi, the Registrar of Companies and the RBI, within whose respective jurisdictions and areas of operations the scam not only took birth but flourished unhindered,” the Supreme Court had said in its order in May.
RBI officials claimed the coordination between regulators and law enforcement agencies have now improved in West Bengal.
“We have already strengthened the mechanism of co-ordination. We have already conducted one set of state-level coordination committee meeting. Also, for the last three months, we are regularly meeting in the sub-committees and reviewing the progress on a continuous basis,” said a senior RBI official.
The banking regulator has also held training sessions for the state police department at the district level to help them check the proliferation of illegal chit fund companies.
However, government officials feel that the steps taken are still not adequate to prevent Saradha-like scams.
“The practice of officers being sent for training to RBI had been in place even before the Saradha scam. But these officers have hardly been used for the purpose for which they were trained,” said a senior official of the West Bengal government.
The state’s Consumer Affairs Minister Sadhan Pande claims such training camps are held occasionally. “They are quite infrequent. Only 150 officers from our state consumer affairs department underwent such training in last one year,” he said.