Finance Ministry asks banks, financial institutions for prompt reporting of vigilance matters

Union Finance Ministry has directed public sector banks and financial institutions, including insurance companies, to promptly report vigilance-related matters concerning whole-time directors (WTDs) of their respective companies.

The directive from the Department of Financial Services (DFS) under the ministry follows several instances where adverse information about board-level appointees was not promptly reported.

In many cases, it said, such critical adverse inputs like private complaints, court observations, references or inputs from the CBI or other Law Enforcement Agencies are being reported only at the time when Vigilance Clearance is specifically sought from the Chief Vigilance Officers (CVO) of PSUs.

Without citing any specific case, the advisory issued earlier this month, said, in certain cases even the crucial information relating to WTDs is omitted in the Vigilance Clearance formats on the ground that no specific column exists for such disclosure.

Observing that omission of any significant information, particularly information relevant to decisions relating to appointments, promotions, board-level postings and placement of WTDs, is a matter of serious concern, it said, strict compliance in such matters is expected from PSUs. The DFS has directed public sector banks and financial institutions for immediate reporting of adverse inputs regarding board level officials even though the alleged lapse pertains to any other capacity other than board.

Besides, it advised them for submission of comprehensive disclosure in vigilance clearance which would include observations or directions of courts or tribunals internal committee findings, audit observations of a serious nature and communications from any department or agency.

CVOs must ensure that the vigilance clearance reflects the most updated and accurate status as on date of issuance and that no material should be suppressed, it added. Earlier this year, the Government in an unusual move demoted Union Bank of India Executive Director (ED) Pankaj Dwivedi to General Manager (GM) of Punjab and Sind Bank.

The Centre’s decision was taken due to an ongoing case in the Delhi High Court. It has been alleged in the court that his appointment as Executive Director of Union Bank of India violated regulations due to the lack of vigilance clearance.