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Staff Accountability framework for NPA Accounts upto Rs500mn

Ministry of Finance (DFS) vide its order dated 29.10.2021 has advised broad guidelines to be adopted by all PSBs on “Staff Accountability Framework for NPA Accounts up to Rs500 million (other than fraud cases). Banks have been advised to revise their Staff Accountability Policies based on these broad guidelines and frame the procedures with approval of the respective boards. These guidelines shall be implemented w.e.f. 01.04.2022 i.e. for accounts turning NPA on or after 01.04.2022.

At present, different banks are following different procedures for conducting staff accountability exercise. Also, 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. While punitive action need to be taken against the officers having malafide intent/involvement, it is essential to ensure that bonafide mistakes are dealt with compassion. There is a need to protect the people taking bonafide business decisions in this competitive environment.

Also, at a time when the country is in need of an economic boost, slow credit delivery to industries due to the fear of implication, is a matter of concern and needs urgent address. Banks with the approval of their Board may decide on threshold of Rs1 mn or Rs2 mn depending on their business size for the need of examining the aspect of staff accountability. 

The new guidelines will surely boost the morale of the PSB employees immensely. Banks will have to complete staff accountability exercise within six months from the date of classification of the account as NPA. Further, depending on the business size of the banks, threshold limits have been advised for scrutiny of the accountability by the CVO. Past track record of the officials in appraisal/sanction/monitoring will also be given due weightage.  

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