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Bank frauds exceeding Rs 3 crore to need panel nod for CBI probe

All bank fraud cases of over Rs 3 crore now need to be referred to an expert panel to decide if it warrants an investigation by the Central Bureau of Investigation (CBI).

This Central Vigilance Commission (CVC) amendment now takes precedence over the earlier rule which said only fraud cases that were over Rs 50 crore in public sector banks need to be referred to such a panel. Bankers have also approached the finance ministry seeking a ‘sunset period’ for investigations so that probe agencies do not hound them for taking genuine business decisions.

“There can be issues due to the prevailing situation in the economy or a particular industry, or a company’s product may become obsolete over a period (of time). But if there are no problems for a certain number of specified number of years, then there is no need to go on a witch hunt, some of which happens post-retirement,” said a banker.

A suggestion has been made asking probe agencies like CBI and CVC to be barred from looking into cases if a loan account remains standard for seven or ten years. The department of financial services (DFS), RBI and CVC have agreed to tweak certain rules in fraud cases although DFS has not acted on it yet.

CVC last week in a circular said that based on discussions with RBI and the finance ministry, the Advisory Board for Banking and Financial Frauds (ABBFF) will be examining the role of all executives and whole-time directors (serving and retired) in cases of Rs 3-50 crore classified as fraud by state-run public sector banks and financial institutions on or after January 6. Cases that are reported before the deadline will be referred to the panel if they have reached the disciplinary authority or where criminal cases are yet to be filed.

While CVC has said that a separate board for cases between Rs 3 crore and Rs 50 crore will be set up, bankers said that there was a need to have quick decisions as the number of cases being referred to ABBFF will now rise multiple times.

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