|Larger CVC role worrying|
|Thursday, 23 February 2017 08:03|
Extending to private banks will slow their functioning
With officials of private sector banks alleged to have helped launder funds during the demonetisation drive – several of them were transferred by their managements and some were even arrested – it is not surprising the government wants to take action against them. One way of doing this, if a Hindustan Times news report is anything to go by, is to extend the purview of the Central Vigilance Commission (CVC) to private banks – right now, under the Prevention of Corruption Act, the CVC can only probe PSUs or government organizations/ministries. The move, HT says, complements a Supreme Court judgment in the Global Trust Bank case last year which extended the scope of the anti-corruption law by bringing in private bank employees under its ambit – prior to this, private sector bank officials could not be prosecuted under the anti.
This is problematic since, once the CVC’s ambit is expanded and chief vigilance officers (CVO) are appointed to private banks, it is just a matter of time before they start looking at the process of giving loans or selling them off at discounts – once this happens, the same problems that prevent PSU banks from taking prompt action on NPAs will start afflicting private banks as well; over a period of time, the CVO process will also start affecting hiring and promotions within banks since all manner of complaints will be made to the CVO. Certainly, there is a need to punish corrupt private sector bank officials who are involved in laundering black money or giving loans to dodgy firms, but it is up to the central bank to figure out ways to do this. Bringing in the CVC will ensure the cure could end up becoming worse than the disease.