The dismantling, which took place on February 28, follows the central vigilance commisioner's (CVC) move to set up a central advisory board on bank frauds.

The central bank had set up the board in 1997 after bankers complained of having developed fear psychosis of enforcement agencies which prevented them from commercial lending. The move to set up the board was initiated by former finance minister P Chidambaram.

The board comprised a retired police commissioner, a chartered accountant and a retired Bombay high court judge. The constitution of the board drew flak from some quarters for non-representation of commercial banking fraternity. The board had indicted former Indian Bank chief M Gopalkrishnan.

From now on, the central advisory board will tackle frauds while regional boards will advise the central board. A separate chapter on bank frauds, which has beenincorporated in the CVC manual since January 1, says that the Central Bureau of Investigation's (CBI) banking securities and frauds cell will be the focal point to coordinate the handling of all bank cases.

The new chapter -- "Special chapter on vigilance management in public sector banks vis-a-vis the role and function of the CVC" -- came into effect from January 1, 1999.

According to the chapter, advices of the advisory boards will not be binding on the CBI. The dismantled board would refer cases to the agency for prosecution after its findings were over.

Moreover, "reference to the boards will lie only is respect of complaints in borrowal accounts which the CBI has suo moto found worthwhile to tentatively pursue," the chapter said.

The central advisory board will deal with cases involving officials of the rank of general manager and above, while the cases of lower officials will be taken care by the regional boards. The CBI's special cell will take up frauds involving Rs 5 crore or above, whilethose between Rs 25 lakh and Rs 5 crore will be handled by the CBI branch concerned. The local police will handle cases involving frauds below Rs 25 lakh.

The vigilance chapter said that category-A cases would comprise serious lapses and irregularities attracting a major penalty, while category-B cases would be those involving procedural lapses. The manual also lays down a strict time frame for investigations and inquiries.