our analysis also suggests that out of 719 officers who were found accountable in 230 large value fraud accounts in the banks over a period of time, 426 officers were up to the rank of senior manager, 196 officers were chief managers and agms, 94 officers were of the rank of dgm, gm and cgm and only 3 officials were from the top management and the board of directors. this statistic highlights the skewed nature of our punitive vigilance process and its tendency to focus on the lower level functionaries. another factor which greatly erodes the efficacy of the vigilance function is the disconnect between the punishment meted out and the offence. we observe that in public sector banks, most of the officials found liable were let off with minor penalties – caution, warning, censure, stoppage of increments for limited period etc. which sends out a wrong message – a message about passive tolerance rather than active intolerance towards misconduct! incidentally, private and foreign banks operating in india adopt a no nonsense approach as reflected by the quantum of penalties imposed for similar misdemeanours including dismissal from service. 20. based on our analysis of large value advance related fraud cases, i would like to highlight following issues for closer scrutiny by the vigilance administration in banks : ( i ) dragging in too many people in the ambit of probe not only delays the process but also scuttles the identification of actual perpetrators ( ii ) holding lower rung officials accountable for frauds even though the sanctioning of advances is usually at the level of senior executives / board ( iii ) the officials at junior level should be brought under the ambit of probe for accountability only if there is deficiency at the monitoring / implementation level ( iv ) establishing accountability in all member banks even in the case of consortium / multiple banking arrangements where there is common tendency on part of the member banks to absolve themselves of all responsibilities and squarely blame the lead bank for deficient credit appraisal / post - disbursement monitoring 21. therefore, what is of essence is the speed with which the fraud is acknowledged, investigations are concluded, staff accountability is fixed and deterrent action is taken. while on the subject of fraud in banks, let me also raise another wider issue. as vigilance officials your focus is on the internal staff but what about the fraudulent borrowers. who ensures that they are appropriately punished? i feel there is an urgent

crucial and yet, the most challenging of the three aspects of vigilance that i mentioned earlier. it is crucial because it has the potential to prevent lapses from occurring by stemming the rot at the initial stages itself. however, it is challenging because it needs to be a continuous exercise across all levels of the organization and demands the focussed attention of the management. this involves keeping close watch on the activity profile and the life style of the employees. the employees, who maintain a flashy life style without accounted for means to support such life style, who rarely take leave, who do not share the finer points of work with fellow colleagues, who take extra interest in the work assigned to others, who are ever ready to help vendors dealing with the institution, who are under debt etc., need to be closely watched from a vigilance angle. 11. this should be followed by strengthening participative vigilance function which encompasses reviewing the existing systems and control, identifying lacunae and putting in place sufficient red flags so that the scope for misconduct is minimised and transgressions are detected swiftly. the systems of the institution which allow the employees to take independent decisions without subjecting them to “ four eye principle ”, allowing use of excessive powers without scrutiny, giving unrestrained financial powers to individual employees, allowing employees to change the terms and conditions of any contract without involving the original sanctioning authorities etc. need to be reviewed and proper checks and balances need to be put in place to avoid misuse of powers by individual employee for their personal benefit. when the precautions become part of the culture of the organisation, the same also act to improve the surveillance and detection vigilance function in any organisation. 12. to strengthen the preventive vigilance function in any institution, involvement of all stakeholders irrespective of their standing in the institution can play an important part. for example, if any branch manager accommodates any constituent after the office hours for some pecuniary benefit for himself or his close friends, the best source to collate information about the activities of such branch manager may be subordinate staff who may be present in the office during this period. similarly any information about the nefarious activities of officials dealing with outside vendors can be collected through market intelligence. 13. holding periodical workshops and training programmes for the dealing staff on vigilance aspects to sensitise them about the need to be cautious while dealing with outsiders and making them aware about the