Top executives of PSU banks are outside service rules

Top executives of PSU banks are outside service rules

Chennai, May 19, 211 (IANS): The country’s top civil servants are subject to service/conduct/disciplinary rules, but top honchos of government-owned banks are not.
In response to a query under the Right to Information (RTI) Act by B. Madhuri of New Delhi, the Department of Financial Services in the finance ministry, said: “It is confirmed that there are no service rules or conduct rules or disciplinary/appeal rules for CMDs/EDs (chairman and managing director/executive director) of nationalised banks other then the “terms and conditions”.

The “terms and conditions” that the department of financial services refers to are nothing but those governing pay and perquisites of CMDs and EDs and do not govern their conduct and the decision-making process while in office.

When asked about this, an ED of a nationalised bank not wanting to be named told IANS: “We are appointed on contract basis by the government. So the bank’s service rules that are applicable for officers do not apply to us (EDs/CMDs).”

“While the government appoints the EDs and CMDs by a notification, there are no disciplinary rules that are applicable for them. These two categories of officials should be brought either under the rules that are applicable for government servants or that is applicable for bank officers,” C.H. Venkatachalam, general secretary of All India Bank Employees’ Association (AIBEA), told IANS.

“The EDs and CMDs do sanction loans. While general managers of banks are governed by service regulations including the procedures for sanctioning of loans and the penalties if the rules are not followed, there is nothing to hold the EDs and CMDs responsible if their actions hurt the bank’s name/financial position,” said another senior official of a nationalised bank not wanting to be named.
“There are several doubtful decisions of the EDs/CMDs. Quite of few of EDs/CMDs have escaped the law as they were not subject to any rules for the two categories of bank executives,” Venkatachalam added.

The only way delinquent EDs and CMDs are brought to book is under the prevention of corruption act, but there should be strong proof against them.

In departmental proceedings the competent authority, despite the absence of 100 percent proof, can proceed against the accused officials basing on what is called preponderance of probabilities, a principle evolved by the Supreme Court,” said a senior official in a nationalised bank.

The bank unions have been demanding framing of rules for EDs and CMDs.
“These two categories of executives should be brought under their bank’s service and disciplinary rules so that doubtful decisions can be curbed,” D.N. Prakash, joint general secretary, All India Bank Officers’ Confederation, told IANS.

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