With regard to Statutory Audit, Reserve Bank of India (RBI) has informed that it has issued Guidelines for appointment of Statutory Central Auditors (SCAs) and Statutory Branch Auditors in Public Sector Banks (PSBs), which covers the norms on eligibility, empanelment and selection as well as the procedure for appointment of such auditors. In case of Private Sector Banks and Foreign Banks operating in India, RBI vide its Guidelines has specified the minimum standards required to be satisfied by audit firms for appointment as SCAs as well as aspects such as term of appointment, rest period, treatment of group of audit firms having common partners, maximum number of banks that an audit firm can undertake statutory audit assignment. In case of overseas branches of Scheduled Commercial Banks (SCBs), RBI has advised that Statutory Auditors have to be appointed for all the overseas branches every year. Further, RBI has also mandated the modalities and procedure for appointment of such auditors. In the case of PSBs having overseas branches, one-third are covered by rotation for quarterly/half-yearly review and audit is done through audit firms operating in the countries where the branches are functioning. Banks, including PNB, carry-out audit in terms of these guidelines. As regards details of irregularities, lapses and fraudulent transactions detected by auditors in their audit, RBI has apprised that it does not have information in this regard.
With regard to concurrent audit, RBI has apprised that its guidelines to SCBs lay down the broad parameters for scope, coverage, types of activities to be covered, appointment of auditors etc. RBI has also mandated a Minimum Audit Programme in form of a checklist, while stipulating that the detailed scope of concurrent audit may be determined and approved by Audit Committee of the bank’s Board of Directors.
With regard to internal audit, RBI has apprised that it has issued detailed guidelines on risk-based Internal Audit System in banks. These mandate banks to put in place well-defined policy, duly approved by their Board, for undertaking risk-based internal audit, and cover areas such as risk assessment process, scope and coverage of internal audit, performance evaluation, review of internal audit function, etc.
RBI, vide circular dated 1.11.2004, conveyed general permission to banks authorised to deal in foreign exchange to issue LoUs in favour of overseas suppliers, banks and financial institutions, up to a specified transaction amount and period, for import of capital and non-capital goods, subject to RBI’s prudential guidelines. RBI discontinued the practice of issuance of LoUsvide circular 13.3.2018.
As per RBI data, the number of complaints against Commercial Banks pertaining to deficiencies in banking services, received in the offices of the Banking Ombudsmans of RBI was 1,02,894 for the financial year (FY) 2015-16, 1,30,987 for FY 2016-17, and 1,63,590 for FY 2017-18. RBI has further apprised that action has been taken on the complaints as per the provisions of RBI’s Banking Ombudsman Scheme, 2006.
This was stated by Shri Shiv Pratap Shukla, Minister of State for Finance in a Written Reply to a Question in Rajya Sabha today.
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Zero Tolerance against Corruption
Central Bureau of Investigation (CBI) has intimated that a total of 273 (268 Regular Cases (RCs) + 05 Preliminary Enquiry (PE)) cases have been registered by CBI relating to corruption in Banks during the year 2017 & 2018 (up to 30.6.2018).
The details of Banks involved in these cases are enclosed at Annexure–A.
Out of the above cases, Charge Sheets have been filed in 37cases against 166 persons/firms including 45 bank officers/officials.
The bank-wise details of these 45 officers/officials are enclosed at Annexure–B.
Further, Central Vigilance Commission (CVC) has informed that the number of officers in respect of whom Commission has advised sanction for prosecution are as under:
| Name of the Bank | FY 2017-18 | FY 2018-19 (till date) |
| Andhra Bank | 1 | |
| Bank of Maharashtra | 1 | |
| Indian Bank | – | 1 |
| Punjab National Bank | 6 | – |
| State Bank of India | 1 | 2 |
| UCO Bank` | 2 | |
| Total | 11 | 3 |
Source: CVC
The Central Government is fully alive and committed to implement its policy of “Zero Tolerance against Corruption” and has taken several measures to combat corruption.
These, inter-alia, include:
- Issue of Instructions by the CVC asking the organizations to adopt Integrity Pact in major procurement activities;
- Ratification of the United Nations Convention against Corruption (UNCAC) in 2011;
- Setting up of additional Special Courts exclusively for trial of CBI cases in different states.
The pro-active measures taken by CVC to ensure that incorrect practices do not happen in future, are as follows:
- Constant updating of the Standard Operating Procedures (SOPs) pertaining to each activity;
- Setting up robust Whistle Blower Mechanism so that the officials functioning at various levels within the organisation get a channel to share their concerns related to vigilance/systemic issues without any fear;
- Identify areas, where (i) there are no rules (ii) the rules that have potential of being misinterpreted or (iii) rules that are impossible to follow and advice framing suitable rules;
- Formation of Preventive Vigilance Committees at Medium and Large Branches to discuss/review at monthly intervals preventive vigilance measures and frauds during the preceding month;
- Need for devising an effective system for review of quality of concurrent audit by peer Chief Vigilance Officers;
- Visits of medium and large branches by Vigilance Officers;
- Offsite Surveillance through reports on various parameters e.g. spike in business levels, cash deposits, remittances, etc.
- Effective and expeditious investigation whenever any irregularity/misconduct is noticed;
- Organising of regular Training Programmes at various levels;
Further, CVC guidelines are conveyed to all the Public Sector Banks (PSBs) from time to time for their meticulous compliance in the matter.PSBs regularly monitor their Systems & Procedures, Guidelines, Policies & Technology to incorporate suitable checks & balances in the system to curb corruption. PSBs have a Board approved Staff Accountability Policy and Regulations for taking action against officials involved in irregularities.
This was stated by Shri Shiv Pratap Shukla, Minister of State for Finance in a Written Reply to a Question in Rajya Sabha today.
ANNEXURE-A
Bankwise details of cases (RCs + Pes) registered by CBI relating to corruption in Banks.
| Sl.No. | Name of Bank | No.of Cases/PEs Registered | |
| Year | |||
| 2017 | 2018 | ||
| 1 | UCO Bank | 7 | 5 |
| 2 | Meghalaya Rural Bank | 1 | 0 |
| 3 | IDBI Bank | 2 | 7 |
| 4 | Bank of India | 3 | 8 |
| 5 | Bank of Baroda | 4 | 3 |
| 6 | Syndicate Bank | 7 | 0 |
| 7 | Corporation Bank | 22 | 1 |
| 8 | ICICI Bank | 2 | 0 |
| 9 | State Bank of India | 24 | 19 |
| 10 | Union Bank of India | 9 | 1 |
| 11 | Punjab National Bank | 23 | 34 |
| 12 | Indian Oversis Bank | 6 | 1 |
| 13 | Indian Bank of Jammu | 1 | 0 |
| 14 | Co-parative Bank | 2 | 1 |
| 15 | Canara Bank | 15 | 6 |
| 16 | APGV Bank | 1 | 0 |
| 17 | Allahabad Bank | 2 | 3 |
| 18 | Central Bank of India | 1 | 3 |
| 19 | Vijay Bank | 3 | 0 |
| 20 | Central Madhya Pradesh Gramin Bank | 1 | 0 |
| 21 | Oriental Bank of Commerce | 1 | 5 |
| 22 | Bank of Maharashtra | 12 | 3 |
| 23 | Dena Bank | 4 | 0 |
| 24 | UttarakhandGramin Bank | 2 | 2 |
| 25 | State Bank of Mysore | 1 | 0 |
| 26 | State bank of Hyderabad | 2 | 0 |
| 27 | United bank of India | 0 | 1 |
| 28 | Lakshmi Vilas Bank | 1 | 0 |
| 29 | Andhra Bank | 1 | 0 |
| 30 | IFCI limited | 1 | 1 |
| 31 | TelanganaGramina Bank | 0 | 1 |
| 32 | Prathma Bank | 0 | 1 |
| 33 | SaptigiriGramin Bank | 0 | 1 |
| 34 | Bihar Co-oparative Bank | 2 | 0 |
| 35 | Muslim Co-oparative Bank | 2 | 0 |
| 36 | Punjab & Sindh Bank | 0 | 1 |
| Total | 165 | 108 | |
Source:CBI
- There are instances where 01 or more than 01 Banks are involved.
ANNEXURE-B
Bank wise details of number of officials of Banks against whom charge sheet has been filed by CBI in cases of corruption in Banks.
2017
| Sl. No. | Name of Bank | Bank Officers/Official involved |
| 1 | Corporation Bank | 3 |
| 2 | State Bank of Travancore | 1 |
| 3 | State Bank of India | 5 |
| 4 | Indian Overseas Bank | 4 |
| 5 | Canara Bank | 1 |
| 6 | Bank of Maharashtra | 1 |
| 7 | Jalgaon District Central Co-op. Bank Ltd. | 3 |
| 8 | Dena Bank | 5 |
| 9 | UttarakhandGramin Bank | 1 |
| 10 | State Bank of Mysore | 4 |
| 11 | State Bank of Hyderabad | 1 |
| 12 | Syndicate Bank | 1 |
| 13 | Punjab National Bank | 2 |
| Total | 32 |
2018
| Sl. No. | Name of Bank | Bank Officers/Official involved |
| 1. | Punjab National Bank | 13 |
| Total | 13 |
Source: CBI
This was stated by Shri Shiv Pratap Shukla, Minister of State for Finance in written reply to a question in Rajya Sabha.
