Know the process of fixing the staff accountability in case of State Bank of India (SBI) bank employees if loan account slips to NPA, under new norms – The Finance Ministry has implemented a fresh set of policy norms to guide state-owned banks in adopting a uniform staff accountability framework for non-performing assets (NPAs) up to Rs 50 crore. The major aim is to “protect employees of the Government banks for their bona fide actions and at the same time make them accountable for any wrongdoing or any inaction on their part”. The guidelines will be implemented with effect from April 1, 2022, for accounts that turn NPAs beginning the next financial year.
The Laid down procedure under New NPA Norms for Staff Accountability
UP TO RS 10 lakh: Staff accountability need not be examined in NPA accounts with outstanding up to Rs 10 lakh. The government has argued that most loans up to Rs 10 lakh are “template-based” and do not constitute a major percentage of the NPA portfolio by amount. Such accounts can turn into NPA even due to a slight change in circumstances including a family health crisis or a shutdown, leading to disruption in cash flows.
Rs 10 LAKH–RS 1 CRORE: For examining staff accountability, banks may decide on a threshold of Rs 10 lakh or Rs 20 lakh, depending on their business size. For loans between Rs 10 lakh and Rs 1 crore, which mainly include home and car loans, SME and agriculture credit, staff accountability is to be examined by a committee formed at regional/controlling offices. For preliminary examination, the controller will submit to the committee a brief report, covering details of the loan and observations in inspection/audit reports for the previous four years. If the committee finds a case of staff accountability exists, this will be examined by a fact-finding officer.
Rs 1 CRORE–50 CRORE: Accounts in this range are mostly credit facilities sanctioned to business units warranting examination by a specialised unit within the banks. NPA accounts in this range should undergo a preliminary examination by a committee constituted at one level higher than the sanction level — an account sanctioned at the regional office will be taken up at the zonal level, those at the zonal level by circle office or head office, and so on.
The committee should be headed by an official senior to the sanctioning authority. For preliminary examination by the committee, a detailed report should be submitted through the controller. If the committee finds material lapses in any of the processes, the account may be referred at the discretion of the committee to the controlling audit office for a detailed examination of staff accountability.
ABOVE 50 CRORE : According to the Finance Ministry notification, for NPA accounts in this range, staff accountability is to be examined as per the existing guidelines. However, the RBI has set a framework under which banks must initiate and complete a staff accountability exercise within six months from the date of classification as a fraud. Details of the exercise and the action taken may be placed before the SCBF (Special Committee of the Board for monitoring and follow-up of Frauds) and intimated to the RBI at quarterly intervals.
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The RBI says banks should bifurcate all fraud cases into vigilance and non-vigilance categories. Only vigilance cases should be referred to investigative authorities. Non-vigilance cases may be investigated and dealt with at the bank level within a period of six months. In cases involving very senior executives, the board or the audit committee may initiate the process of fixing accountability, which should not be held up on account of the case being filed with law-enforcement agencies.
What is the existing framework?
Currently, different banks are following different procedures for staff accountability exercises. Banks carry out such exercises in respect of all accounts that turn NPA. This has made many bankers reluctant about taking exposure in new units or projects. As a result, credit offtake to small units that require bank funding were starved of liquidity, especially after the pandemic began.
