Be prompt in reporting vigilance matters linked to Directors, govt tells public sector banks
Finance Ministry Mandates Faster Vigilance Reporting for Full‑Time Directors in Public‑Sector Banks
On December 28, the Indian Finance Ministry – through its Department of Financial Services (DFS) – issued a directive requiring public‑sector banks and other financial institutions, including insurers, to promptly disclose any vigilance‑related concerns about full‑time directors on their boards.
The order stresses that failing to share essential information that could influence decisions on appointments, promotions, board postings, or the placement of full‑time directors is a serious issue. All public‑sector undertakings (PSUs) are expected to comply strictly with this requirement.
The directive came after a number of cases surfaced where board‑level appointees’ background checks were not reported in a timely manner. It notes that critical adverse inputs—such as private complaints, court observations, references, or statements from the CBI or other law‑enforcement agencies—often emerge only when a PSU seeks a clearance specifically from its Chief Vigilance Officer (CVO) during the promotion or appointment process.
It further points out that, in some situations, vital information about full‑time directors is omitted from vigilance‑clearance forms simply because those forms lack a dedicated column for such disclosures.
Under the new guidance, banks and financial institutions must immediately report any adverse inputs concerning board officials, even if the alleged lapse involves a role other than a board position. The DFS also requires that vigilance‑clearance documents encompass a full range of disclosures, including judicial observations, findings from internal committees, serious audit remarks, and communications from any government department or agency.
Chief Vigilance Officers are instructed to ensure that their clearance documents are both up‑to‑date and complete at the time of issuance, with no material suppressed.
An earlier instance that prompted this directive involved the Union Bank of India, where the promotion of Executive Director Pankaj Dwivedi to General Manager of Punjab & Sind Bank was reversed due to the absence of a required vigilance clearance. The decision was taken after a Delhi High Court case alleged that his appointment violated norms, as a clearance had not been obtained.
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