All-India Bank Officers’ Confederation (AIBOC) has said that credit approval committee members in public sector banks should be held responsible for any violation in the norms.

The arrest of the Chairman and Managing Director (CMD) of Syndicate Bank on charges of corruption exposes the lacuna in the committee system of credit sanctions, according to DN Prakash, Vice-President of AIBOC and President of Corporation Bank Officers’ Organisation (CBOO).

He told Business Line that the decision on large loans is taken by the credit approval committees of the banks.

While the CMDs of the banks are Chairmen of the committees, Executive Directors and General Managers are committee members. When a CMD pushes a proposal, other members will not have the courage to say no. Once the committee decides, none of the members is responsible for anything, he said.

The committee members should be made accountable for any lapses on their part by overlooking the laid-down guidelines or the norms. Committee members should be accountable for any violations in the existing norms, he said.

Prakash urged the government and the RBI to review the committee system of credit sanctions at the top level in banks. He said the government should set up a transparent mechanism for selection to the top posts in public sector banks.

The selection should be conducted by an independent agency such as UPSC, he said. The names of the candidates selected for interview and those finalised should be put on the websites of the independent agency concerned and the Finance Ministry, he added.

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