Senior cabinet minister Arun Jaitley said that the Prevention of Corruption Act needs to be amended to protect public servants, adding weight to complaints by bankers that they are being wrongly targeted by investigation agencies for bonafide business decisions that failed. Jaitley said the legislation that dates to the pre-liberalisation era puts officials who have arrived at decisions honestly at risk of being charged with corruption.
He also called for patience over rising oil prices and the weakening rupee, adding that the government will meet the fiscal deficit target.
In a veiled reference to the recent arrest of Bank of Maharashtra CEO Ravindra Marathe, Jaitley said that if state police were allowed a free run, the federal structure could be undermined.
“We cannot overlook the federal structure of India in dealing with crimes,” Jaitley said at the fifth State Bank of India Banking & Economics Conclave in an address through video link. “Law and order is a state subject. If state police are allowed to investigate central agencies, it would disbalance the whole system.”
“We need a certain level of statesmanship by both central and state agencies. Activism by state agenices should come with restraint. We need to put an entire relationship in place,” he said. Jaitley is currently recuperating after a kidney transplant.
In the absence of a clear-cut system that determines who investigates criminality, the system will grind to a halt, Jaitley said. Economic decision-making is a critical function that cannot be dictated by slogans and populism, he said.
His comments came amid a series of arrests and charges being filed against top serving and retired state-run bank executives in corruption cases. While some are new, the Central Bureau of
Investigation and the Enforcement Directorate have charged former bankers in older cases as well.
Recently, former Canara Bank Chairman S Raman quit a Reserve Bank of India panel after the CBI began a probe against him in connection with a loan to Winsome Diamonds even though the lender was one among many in the lending consortium.
“The Prevention of Corruption Act is a pre-1991 piece of legislation and one of the most badly drafted,” said Jaitley. “It is extremely important that we amend the Prevention of Corruption Act with the changes suggested by the standing committee.”
A parliamentary committee has recommended several changes to the Act that governs corruption in government services, including the need for sufficient proof of guilt to frame charges.
“If we want effective decisionmaking, we need to put in perspective what is criminality, who should investigate,’’ he said. “We may paralyse decision-making if we don’t do this.”
State Bank of India chairman Rajnish Kumar told ET on Tuesday that the country’s investigative agencies have to examine whether accusations of corruption against bankers are justified before filing charges as bonafide business decisions that go awry can always be questioned in hindsight.
“Not every NPA (nonperforming asset) is an act of criminality… mistakes will happen during decision-making,” Kumar told ET in an interview. “Decisions are taken in a certain context… Every decision can be questioned when it has gone wrong. There is no premium if the decision is right — we don’t get any credit for that.”
The Indian Banks’ Association (IBA) had condemned the action against bankers by investigative agencies late last month. “To slap a criminal case against bankers for sanctioning loans is silly,” VG Kannan, IBA CEO and former State Bank of India official had said at the time.
Jaitley said there shouldn’t be any panic response to rising oil prices and emphasised the need for fiscal discipline.
“I can say with certainty that we will try and stick to our fiscal deficit target this year,” he said.
“We should have patience and restrain with regards to high oil prices. There is little domestic control on oil scarcity. We should not succumb to pressures to throw fiscal discipline to the winds. The consequences will be worse than the problem.” He also said that the rupee, which recently fell to a record, will recover.
“India remains committed on the path of being an open economy,” he said. “But if two major economies moderate their currency, it will have a significant impact on Asian economies. Our fundamentals are strong like in 2015 and even this time I think the rupee will come back to its normal range in a few weeks. There should be no panic reaction from us. We have to just keep the fundamentals of the economy strong.”
Source : Economic Times