The Department of Financial Services, Ministry of Finance issued a circular yesterday to the Chief Executive Officers (CEOs) of all Public Sector Banks (PSBs), Financial Institutions (FIs) and Insurance Companies assuring them of freedom of non-interference in matters of commercial decisions, transfers, and postings etc. It was conveyed in very clear terms that the Government will not interfere in the commercial decisions of the Banks/FIs. It is further amplified as follows:
• The Banks/FIs should take all commercial decisions in the best interest of the organization without any fear or favour. All decisions should be taken based on facts of the case and objectivity. No such decision should be taken out of any other extraneous considerations such as the influence or the position that the borrower is holding.
• Each Bank/FI should have their own objective, well laid out transfer and posting rules which should be followed strictly. No exception should be made in such rules at the behest of any recommendation given by anyone including anybody from the Ministry of Finance. If, for genuine reasons, any exception to the rule is made, it should be done only by CMD by giving proper reasons.
• Each Bank/FI should have a robust grievance redressal mechanism for borrowers, depositors as well as staff. The aggrieved person should have an opportunity to represent his case at least at two levels.
It is trusted that the freedom given to Banks/FIs by assurance of non-interference will be used in the most objective manner. However, if any complaint comes to this Department from anybody informing that exceptions were made in certain cases without any objective basis, and in order to favour somebody, the person taking such decision would be accountable.
It may be worthwhile to mention here that the Prime Minister, Shri Narendra Modi during his address to the CEOs of all the PSBs, FIs and Insurance Companies in the Concluding Session of the two days Bankers’ Retreat called Gyan Sangam at National Institute of Banking Management (NIBM), Pune on last Saturday, 3rd January, 2015 had also told them that the banks would be run professionally, and there would be no interference. But the accountability was essential. He said the Government had no vested interest, and public sector banks can derive strength from this fact. This circular is also in line with these directions of the Prime Minister.
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