Finance Ministry mandates prompt vigilance reporting by PSU banks on board-level Directors

The Finance Ministry has ordered public sector banks and financial institutions, including insurance companies, to promptly report vigilance-related matters related to whole-time Directors on their boards.

The Finance Ministry's Department of Financial Services' (DFS) directive declares that non-disclosure of any crucial information pertinent to decisions surrounding appointments, promotions, board-level postings, and placement of whole-time Directors is a serious issue that all public sector undertakings (PSUs) are expected to handle with strict compliance.

Delayed reporting prompts government action

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The directive is prompted by a number of cases of delayed reporting of board-level appointments' information. The order indicates that in many instances, such critical adverse inputs as private complaints, court observations, references or inputs from the CBI or other law enforcement agencies are being reported only when vigilance clearance is specifically sought from the Chief Vigilance Officers (CVO) of PSUs at the time of promotion or appointment.

Gaps in vigilance clearance formats

The advisory issued this month indicates that in some situations, critical information regarding whole-time Directors is even being left out in the vigilance clearance formats because there is no specific column for such disclosure.

The DFS has instructed public sector banks and financial institutions to report anything negative about the board-level officials right away, even if it is based on an alleged lapse concerning a different position other than the board.

It has also asked for comprehensive disclosures in vigilance clearance, including court or tribunal observations or directions, internal committee findings, audit observations of a serious nature and communications from any department or agency.

CVOs held accountable for accuracy

CVOs are required to make sure that the vigilance clearance indicates the latest and correct status at the time it is issued and that no important information is concealed, it further mentioned.

In the previous year, the government had to undo its decision on the promotion of Union Bank of India’s ED Pankaj Dwivedi to the position of GM at Punjab & Sind Bank, since vigilance clearance had not been issued in his case.

The Centre's decision was made in view of an ongoing case at the Delhi High Court, where it was claimed that his appointment as Union Bank of India's ED was a violation of norms since there was no clearance from vigilance.

With IANS inputs