In a significant move to tighten governance, the Union Finance Ministry has issued a stern directive to all public sector banks, financial institutions, and insurance companies. The order mandates the immediate and prompt reporting of all vigilance-related matters concerning their whole-time directors (WTDs) and board-level appointees.
Advisory Flags Serious Lapses in Disclosure
The Department of Financial Services (DFS), under the finance ministry, issued an advisory earlier this month. It expressed serious concern over repeated instances where critical adverse information about top executives was either reported late or not disclosed at all. The ministry noted that such information often surfaces only when a specific vigilance clearance is formally sought from the chief vigilance officers (CVOs).
The advisory highlighted that crucial inputs like private complaints, observations from courts, references from the Central Bureau of Investigation (CBI) or other agencies were frequently omitted at the appropriate stage. Alarmingly, in some cases, vital data was left out of vigilance clearance formats simply because no specific column existed for such disclosure.
Strict Compliance Demanded for Appointments and Promotions
Labeling these omissions as a matter of "serious concern," the DFS has demanded strict compliance from all public sector undertakings (PSUs). The directive underscores that such vigilance information has a direct bearing on critical personnel decisions. This includes appointments, promotions, board-level postings, and the placement of whole-time directors.
The ministry has now instructed entities to report any adverse inputs related to board-level officials without delay. This rule applies even if the alleged misconduct pertains to a role the official held in a capacity other than their board position.
Comprehensive Disclosure and Updated Clearances Mandated
The DFS has laid down a comprehensive framework for disclosures. Banks and financial institutions must now include a wide array of information in their vigilance clearance submissions. This includes:
- Observations or directions from courts or tribunals.
- Findings of internal committees or probes.
- Serious audit observations.
- Formal communications from any government department or agency.
Furthermore, chief vigilance officers have been personally instructed to ensure that every vigilance clearance reflects the most updated and accurate status as on the date of its issuance. The ministry has explicitly warned against the suppression of any material information.
Recent Case Highlights Consequences
The government's firm stance follows a high-profile action earlier this year. In an unusual step, the government demoted Pankaj Dwivedi, the Executive Director of Union Bank of India, to the rank of General Manager at Punjab & Sind Bank. This decision was directly linked to an ongoing case in the Delhi High Court. The case alleged that his initial appointment as Executive Director violated regulations due to the absence of a proper vigilance clearance.
This incident appears to have catalyzed the ministry's latest push for transparency and adherence to vigilance norms at the highest levels of public sector banking.
