The Central Vigilance Commission (CVC) recently restructured the Advisory Board on Banking and Financial Frauds (ABBFF) to strengthen the scrutiny of bank fraud cases. Founded as the primary examination body for bank fraud instances prior to referral to investigative bodies like the Central Bureau of Investigation, the ABBFF additionally performs frequent fraud analyses within the finance system.
The Nature and Role of the ABBFF
The ABBFF’s duties include providing insights and policy suggestions related to fraud prevention and management to regulatory bodies such as the Reserve Bank of India and the CVC. The reconstituted board is composed of a Chairman and four other members, each offering their expertise in fraud-related matters. They hold their positions for a two-year tenure.
Mandatory Referrals and Advisory Function
All public sector banks, insurance companies, and financial institutions are required to refer fraud cases exceeding Rs. 3 crore to ABBFF before commencing criminal investigations. The advice given by ABBFF concerning criminality and malafide involvement of officials is required to be taken into account by the competent authority. The ABBFF also extends its advisory support to cases referred by the CVC or the CBI.
Omission of the “Sunset Clause”
Interestingly, ABBFF’s functioning does not incorporate the concept of a “sunset clause,” which could have restricted actions against bankers for credit decisions after a certain period.
About the Central Vigilance Commission (CVC)
The CVC was established by the Government in 1964 to advise and guide Central Government agencies in vigilance matters. Following the recommendation of the Committee on Prevention of Corruption led by Shri K. Santhanam, the CVC Act was enacted in 2003, providing it statutory status.
Composition of the Commission
The Commission comprises the Central Vigilance Commissioner and up to two Vigilance Commissioners. They are appointed by the President based on the recommendation of a committee consisting of the Prime Minister, the Home Minister, and the Leader of the Opposition in Lok Sabha. These officers serve a term of four years or until they reach the age of 65 years, whichever is earlier.
The CVC’s Functions
The CVC receives complaints about corruption or misuse of office and recommends appropriate action. Entities or individuals such as the central government, the Lokpal, or whistleblowers can approach the CVC. While it is not an investigating agency, the CVC is authorized to inquire into offences alleged to have been committed under the Prevention of Corruption Act, 1988 by specific categories of public servants, having investigations conducted either through the CBI or through chief vigilance officers in government offices.