PSBs told to revise staff accountability norms for NPAs

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Public Sector Banks (PSBs) have been asked to adopt broad guidelines on staff accountability for Non Performing Assets (NPAs) or bad loans of up to Rs 50 crores. This was done to protect the commercial decisions taken by bank employees and quicker resolution of vigilance cases taking into account the past record of such staff. Depending on their business size, banks may decide on a threshold of Rs 10 lakh or Rs 20 lakh, to examine all aspects of staff accountability, with the approval of their boards.

Bona fide mistakes to be dealt with compassion

The Indian Banks Association (IBA) in a statement said that banks have been advised to revise their staff accountability policies based on these broad guidelines and frame the procedures with the approval of the respective boards.

The guidelines will be implemented from April 2022 for bad loans on or after April 1 that year. IBA also said that banks are presently following various procedures for staff accountability. Adding to that, staff accountability exercise is being carried out in respect of all accounts which turn NPA. This approach not only adversely affects staff morale but also puts a huge strain on the bank’s resources.

The IBA said that, though strict action needs to be taken against officers who have mala fide intentions, it is essential to ensure that bona fide mistakes are dealt with compassion.

At a time, when the country needs an economic boost, slow credit delivery to industries due to the fear of being implicated is a matter of concern and need to be addressed as soon as possible, the bank association said.