Reforms aim to shield commercial banks, especially PSBs, from the vagaries of the 3Cs — the Comptroller and Auditor General (CAG), Central Vigilance Commission (CVC) and Central Bureau of Investigation (CBI) — that have completely paralysed decision-making in public sector banks. The fear of retroactive open-ended enquiries by the CAG, CVC and CBI makes decision-making, especially for accepting losses, an anathema for PSB managements.
PSB managements have no desire to accept responsibility for non-performing assets (NPAs). The chief concern for the head of a PSB is to have a peaceful retirement, hopefully as an independent director on several well-paying private company boards. Nobody wants 3C officials knocking on one’s doors a few years into retirement. This is irrespective of the adverse impact a build-up of NPAs may have on a bank’s balance sheet, on sector prospects or even on the state of the economy.