The Banks take up on hand defining certain acts performed in good faith and in bonafide background as not covered under "misconduct" or "vigilance oriented" despite emergence of adverse results, and provide policy guidelines thereon. Good governance and bonafides of administration need that the Banks adhere to their own precept in practice universally to all officers and selectively to a chosen few. Banking operations are risk oriented and taking bonafide decisions may sometimes involve risk and eventually may result in financial loss. Banks on the one hand desire that their officers should discard the fear complex and work towards business progress and development. At the same time in many cases of bonafide actions of officers bringing adverse results were followed by disciplinary cases and charge sheets, despite policy enunciation to the contrary. Policy guidelines issued from time to time contain attached proviso setting forth exceptions to the rule. It is not verified if the particular case falls under the "proviso" (exception) or the "rule", and arbitrarily charge sheets are issued.

It is in this context that it is necessary for an officer to be well versed in the rules and policy guidelines of the Bank. He must be in a position to properly explain his stand, in the background of the declared policy of the Bank and exceptions set for various rules, if he had acted under ambit of the same. We have taken here on record certain immunities declared by CVC and the PNB, in particular cases, where officers act bonafide and despite that there occurs some financial loss.

The following extracts are from the web-site of CVC contained in the special chapter titled, "Vigilance in Banks". It describes both the types, i.e. vigilance lapses and administrative omissions (non-vigilance lapses). It also precludes from the ambit of vigilance scrutiny what are defined as genuine cases of action of officers, which going wrong on account of inherent risks involved in banking business.

In banking institutions risk-taking forms an integral part of business. Therefore, every loss caused to the organisation, either in pecuniary or non-pecuniary terms, need not necessarily become the subject matter of a vigilance inquiry. It would be quite unfair to use the benefit of hind-sight to question the technical merits of managerial decisions from the vigilance point of view. At the same time, it would be unfair to ignore motivated or reckless decisions, which have caused damage to the interests of the organisation. Therefore, a distinction has to be drawn between a business loss which has arisen as a consequence of a bona-fide commercial decision, and an extraordinary loss which has occurred due to any malafide, motivated or reckless performance of duties. While the former has to be accepted as a normal part of business and ignored from the vigilance point of view, the latter has to be viewed adversely and dealt with under the extant disciplinary procedures.

Whether a person of common prudence, working within the ambit of the prescribed rules, regulations and instructions, would have taken the decision in the prevailing circumstances in the commercial interests of the organisation is one possible criterion for determining the bonafides of the case. A positive response to this question may indicate the existence of bonafides. A negative reply, on the other hand, might indicate their absence. It follows that vigilance investigation on a complaint would not be called for on the basis of a mere difference of opinion/ perception or an error of judgement simpliciter or lack of efficiency or failure to attain exemplary devotion in the performance of duties.

Such failures may be a matter of serious concern to the organisation but not from the vigilance point of view. They have to be dealt with separately. The criteria indicated above for determination of a vigilance angle in a case would also obviously exclude all cases of misdemeanours in personal life. Administrative misconduct, such as, unpunctuality, drunken behaviour at work etc. would again be left to the disciplinary authority to deal with in an appropriate manner.

Similar enunciation is also made by PNB in its web-site under the title "Vigilance Manual" (Chapter -2). These are quoted as under:

Vigilance activity in financial institutions is an integral part of the managerial function. The raison d'être of such activity is not to reduce but to enhance the level of managerial efficiency and effectiveness in the organisation. In Banks risk-taking forms an integral part of business. Therefore, every loss caused to the organisation, either in pecuniary or non-pecuniary terms, need not necessarily become the subject mater of a vigilance inquiry. It would be quite unfair to use the benefit of hindsight to question the technical merits of managerial decisions from the vigilance point of view. At the same time, it would be unfair to ignore motivated or reckless decisions, which have caused damage to the interests of the organisation. Therefore, a distinction has to be drawn between a business loss which has arisen as a consequence of a bona fide commercial decision, and an extraordinary loss which has occurred due to any malafide, motivated or reckless performance of duties. While the former has to be accepted as a normal part of business and ignored from the vigilance point of view, the latter has to be viewed adversely and dealt with under the extant disciplinary procedures.

Whether a person of common prudence, working within the ambit of the prescribed rules, regulations and instructions, would have taken the decision in the prevailing circumstances in the commercial interests of the organisation is one possible criterion for determining the bonafides of the case. A positive response to this question may indicate the existence of bonafides. A negative reply, on the other hand, might indicate their absence. It follows that vigilance investigation on a complaint would not be called for on the basis of a mere difference of opinion/perception or an error of judgement simpliciter or lack of efficiency or failure to attain exemplary devotion in the performance of duties. Such failures may be a matter of serious concern to the organisation but not from the vigilance point of view. They have to be dealt with separately.

Although formulation of a precise definition is not possible, generally such an angle could be perceptible in cases characterised by:

1. Commission of criminal offences like demand and acceptance of illegal gratification, possession of disproportionate assets, forgery, cheating, abuse of official position with a view to obtaining pecuniary advantage for self or for any other person; or

2. Irregularities reflecting adversely on the integrity of the public servant; or

3. Lapses involving any of the following:

   1. Gross or willful negligence;

   2. Recklessness;

   3. Failure to report to competent authorities, exercise of discretion without or in excess of powers/jurisdiction;

   4. Cause of undue loss or a concomitant gain to an individual or a set of individuals/a party or parties; and

   5. Flagrant violation of systems and procedures.

4. Following cases would also be perceived to have vigilance overtones and invite major penalty:

   1. Irregularities in opening of accounts leading to the creation of fictitious accounts.

   2. Recurrent instances of sanction of ODs in excess of discretionary powers/sanctioned limits without reporting;

   3. Frequent instances of accommodations granted to a party against norms e.g. discounting bills against bogus MTRs; purchase of bills when bills had earlier been returned unpaid; affording credits against un-cleared effects in the absence of limits and opening L/Cs when previously opened L/Cs had devolved.

   4. Cases in which there is a reasonable ground to believe that a penal offence has been committed by a govt. servant but the evidence forthcoming is not sufficient for prosecution in a court of law, e.g. Possession of disproportionate assets;

   5. Obtaining or attempting to obtain illegal gratification;

   6. Misappropriation of govt. property, money or stores;

   7. Obtaining or attempting to obtain any valuable thing or pecuniary advantage without consideration or for a consideration which is not adequate.

   8. Falsification of govt. records;

   9. The cases involving any of the lapses such as gross or willful negligence,

      • recklessness,

      • exercise of discretion without or in excess of powers/jurisdiction,

      • causing undue loss to the organisation or a concomitant gain to an individual and

      • flagrant violation of systems and procedures.

   10. Misuse of official position or power for personal gain;

   11. Disclosure or secret or confidential information even though it does not fall strictly within the scope of the Official Secrets Act.

   12. False claims on the govt. like TA claims, reimbursement claims etc.

The criteria indicated above for determination of a vigilance angle in a case would exclude all cases of misdemeanours in personal life. Administrative misconduct such as unpunctuality, drunken behaviour at work etc. would again be left to the disciplinary authority to deal with in an appropriate manner.

The Chief Vigilance Officer has been authorised to decide upon the existence of a vigilance angle in a particular case, at the time of registration of the complaint. Once a complaint has been registered as a vigilance case, it will have to be treated as such till its conclusion, irrespective of the outcome of the investigation.

Obviously when issuing charge sheet, reference has to be made to both the Conduct Regulations and also the Policy Guidelines of the Bank for classification of the acts under question, to decide, if these falls under misconduct, or under vigilance-oriented misconduct or genuine losses in risk-prone business environment. When a charge sheet is received, it is for the charged officer to examine and satisfy that the Bank has not violated the policy guidelines. Where policy guidelines are violated or discriminatory action is initiated in particular cases, the charged officer has a genuine grievance in this matter and he should air the same effectively at the earliest forum available to him.