. the cell has also put in place a whistle blower policy for the bank so that instances of corruption can be exposed by an employee without fear of retribution, or without the complainant ’ s identity being disclosed. finally, with a view to promoting transparency in our functioning and restricting ad - hoc exercise of powers, the bank has taken additional measures such as : page 10 of 11 providing substantial disclosure on the bank ’ s website regarding its functioning ; the procedures followed in its decision - making ; and the timeframe for granting approvals and permissions. departments that have public interface are required to display a citizen ’ s charter, which indicates time schedules for diverse activities ; for deficiency in service, a publicised grievance redressal system is in place. requirement that whenever any monetary penalty is imposed on a regulated entity, such decisions are taken by a committee unconnected with the underlying operation, and not by any individual officer, after following a due process ; the details of the penalties are also disclosed on the bank ’ s website. all tenders that are floated or awarded by the bank above a certain monetary limit are displayed on the website. conclusion let me conclude. being a public sector institution, and as argued conceptually above, the reserve bank of india considers preventive vigilance measures as the lynchpin of its efforts for good governance. the extant preventive vigilance measures at the bank have helped its employees adhere to its regulations and the code, with any deviations being carefully detected, scrutinised and remedied. the central vigilance cell at the bank will continue in its endeavour to preserve the highest level of integrity at the bank by sustaining and strengthening these preventive vigilance measures further. we look forward to the commission ’ s support and guidance as we seek – in the ever - increasing complexity of the bank ’ s environment – to strengthen its preventive vigilance framework, by simplifying rules and procedures as also by leveraging technology to ensure compliance. thank you. references becker, gary s. ( march - april 1968 ) “ crime and punishment : an economic approach ”, journal of political economy, chicago journals, 76 ( 2 ), 169 - 217. becker, gary s. ( 1974 ) essays in the economics of crime and punishment. new york : national bureau of economic research, columbia university press. page 11 of 11

s “ crime and punishment ” the modern economic theory of corruption and how to prevent it emanates largely from gary becker ’ s insightful and seminal pieces on crime and punishment during 1968 - 1974. gary becker, a young economist at the university of chicago, took the theory away from moral and ethical basis to one based on optimal human behaviour in response to the presented economic incentives. he examined his own behaviour with regard to undertaking parking violations when rushing to work, which involved trading off the expected cost of illegal parking in a convenient spot, which he roughly calculated as the likelihood of getting a parking ticket violation multiplied by the parking fine ( assuming non - payment of the fine would be too costly not to pay up ) against the benefit in the form of convenience and reaching his class in time. often, this calculation prompted him to opt for the parking violation, as legal parking in an inconveniently located garage did not seem economically attractive! becker extrapolated from his own daily behaviour to an important economic insight. [ as an aside, “ economics ” derives from the greek word “ oikonomika ” ( οικονομια ), which means “ household management ” and was the name of a treatise by aristotle. ] the insight was that criminals in society do the same calculation of the probability of getting caught times the potential punishment while determining whether to choose a criminal lifestyle and what crimes to engage in ; conversely, if criminals responded in this manner to economic incentives rather than ( only ) because they had character flaws or mental illnesses, then how should laws and their enforcement be organised taking into account the costs of enforcement, and might it be excessively costly and economically undesirable in practice to reduce crime rates to zero? building on this fundamental insight that governance lapses may be rational choices rather than mental illnesses or character flaws in transgressors, we could consider a simple but instructive conceptual framework that may help understand how preventive, detective and punitive vigilance work with each other and should be designed given the rational best response page 2 of 11 of citizens or employees, who given the incentives, will all be treated uniformly as potential offenders. a conceptual framework the framework is illustrated in the following schematic of how vigilance and employee actions are sequenced in a typical institutional setting. let us walk through it step by step. the employee is in control of an action whose outcome can be “ good ” or “ bad ”. if the