Banking News

Banks set up panel to guard executives from corruption cases


New Delhi: Banks have set up a panel headed by former Central Bureau of Investigation (CBI) special director DC Jain to prepare strategies and a framework to effectively deal with cases against lenders under the Prevention of Corruption Act, ET has learnt.

When contacted, Indian Banks Association (IBA) chief executive Sunil Mehta confirmed that a committee has been set up but declined to divulge further details.

“The committee will be examining various related issues,” he said.

Banks had been pressing for immunity from arbitrary arrest or action by investigating agencies against their top executives for taking commercial decisions such as grant of loans, but there has been little headway on this demand so far. They have sought additional protection under Section 17A of the Prevention of Corruption Act (PCA), extending the immunity currently given to the top brass of the National Bank for Financing Infrastructure and Development, or NaBFID, to its officials.

Under Section 17A of PCA, prior approval is necessary for conducting any “enquiry, inquiry, or investigation” into any offence allegedly committed by a public servant. Here, the alleged offence is “relatable to any recommendation made or decision taken by such a public servant in the discharge of his official function or duties.”

“A decision will be taken after this committee’s report is studied,”said a government official, adding that the Jain committee was set up after initial deliberations with the government. The panel will have representatives from three state-run banks, including the country’s largest bank, State Bank of India.As per the standard operating procedures (SOPs) for processing of cases under Section 17A of PCA, any police inquiry into decisions taken by public servants while discharging their official duties requires prior approval from competent authorities.

Banks Set Up Panel to Guard Execs from Corruption Cases

In 2021, however, former SBI chairman Pratip Chaudhuri, was arrested in a loan scam case, and later granted bail.

On Monday, the Bombay High Court criticised the CBI’s December 2022 arrest of former ICICI Bank MD Chanda Kochhar in a loan fraud case as an “abuse of power.”

The CBI in its FIR had accused Chanda Kochhar, her husband Deepak Kochhar, Videocon’s Venugopal Dhoot, and companies including Nupower Renewables, Supreme Energy, and Videocon Industries of criminal conspiracy and violations of PCA.

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