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THE Central Vigilance Commission (CVC) has advised banks against giving a clean chit to borrowers facing criminal charges with whom they enter into a one-time settlement of dues. The offences would continue to be probed by the investigating agencies concerned-Central Bureau of Investigation (CBI) in cases where dues are over Rs 1 crore.
The issue has assumed significance with investigating agencies who have come across cases of borrowers with criminal cases against them being given a clean chit after the one-time settlement with banks. The clean chit by banks tends to exonerate them of the larger crime perpetrated.

Criminal cases against such borrowers involve obtaining bank loans through fraudulent means or violating the law of the land. These are cases that fall outside the purview of the banks' mandate and only specialised agencies are equipped to handle.

Bankers represented by the Indian Banks' Association, a self-regulatory body of these institutions, recently met the CVC and CBI in Delhi to discuss how to address one-time settlements in such cases. They also discussed the probability of including suitable clauses while drafting agreements for settlements.

Following the meeting with the agencies, bankers have decided to insert specific clauses into the agreements while dealing with such defaulters. This would absolve them of financial liability with the bank, but not of criminal charges.

"We have assured CVC and CBI that such clauses would be added to the agreement whereby both the agencies could continue to conduct their probe despite the clean chit given by the banks," IBA chief executive K Ramakrishnan told reporters.

Mr Ramakrishnan also indicated that IBA would soon issue guidelines to be followed while drawing up agreements for one-time settlements. This would ensure uniformity in practices adopted by all banks while dealing with such cases.

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