The CVC further observed that while replying to the charges levied against him, the charged officer normally takes the plea that he had just put his signature as a formality, without application of mind as he was holding the charge for a short period in the absence of the regular officer. The letter adds that while deciding on a case, such a plea cannot be given weightage as it is expected that every officer while taking a decision and putting his signature, must apply his mind in the matter.
In view of this, CMDs of all public sector banks are advised that all officers may be instructed not to sign on loan proposals without application of mind, the letter notes.
The letter has triggered a sharp reaction from CMDs of PSBs, who have taken up the matter with the MoF explaining how this could hurt decision-making. In their reply to the MoF, the PSBs have pointed out that if officers were advised not to sign any loan proposals, without due application of mind, the credit decision mechanism in banks would go haywire and they may not sign papers saying they needed time. This would derail the entire credit process and the banking industry, which is facing tough challenges to maintain their performance, would suffer further in due course of time, the letter to the ministry says.
According to a letter from the CMDs to the finance ministry, the CVC's contention that the plea of temporary officers cannot be given weightage will create a fear psychosis among officers, preventing them from taking even reasonable decisions.
Under the circumstances, we request you to take a view of the CVC instruction so as to reassure the officer community to work fearlessly and for the betterment of banks, said the letter.
Bankers believe that the inspection by the RBI and scrutiny by the credit committee of banks, in the case of large proposals, are good enough to keep a check on the wrong doings by any officials and vigilance processes shouldn't be made complicated.