“The proposed mechanism could cover the cases for restructuring both under standard and non performing account categories,” said an executive aware of the development adding that the committee can vet the restructuring proposals above a threshold limit and provide opinion on other cases.
This comes as banks are under pressure to justify their commercial decisions and face undue scrutiny from vigilance agencies. Most recently, State Bank of India had to come out with a statement, in the fraud of Rs 22,842 crore at ABG Shipyard ltd, denying that there was an effort to delay the process of informing authorities. “The lender’s forum diligently follows through with CBI in all such cases,” the bank had said.
Key executives from leading banks including State Bank of India, Punjab National Bank, ICICI Bank and IDBI Bank will be part of a working group to finalise the structure of this proposed committee.
“The recommendations are a part of the Indian Banks’ Association (IBA) measures to provide safeguards for bankers against arbitrary actions of law enforcement agencies,” the above quoted executive said adding that a formal mechanism can be initiated to take a well informed and compliant decision.
The RBI had in 2016 as part of norms for resolution of large borrowers envisaged the constitution of an Overseeing Committee (OC), but its latest guidelines in 2019 on, ‘Prudential Framework for Resolution of Stressed Assets,’ did not mention such a requirement.
Set up in 2017, by RBI the five member OC included former chief vigilance commissioner Pradeep Kumar, former State Bank of India chairman Janki Ballabh, former L&T Finance Holdings Chairman YM Deosthalee, former Canara Bank chairman MBN Rao and then member SEBI, S Raman. The OC used to work through multiple benches on the cases referred to it by the banks.
“The proposed expert committee may function along similar lines and could be headed by an outsider like a senior judge and other members roped in from financial institutions,” said another executive aware of the developments.
The IBA has already engaged senior counsel and former attorney general Mukul Rohatgi and has sought changes in existing criminal laws to shield bankers from arbitrary arrests.
