Understanding Vigilance and the central vigilance commission​

1. Overview of Vigilance

Vigilance in a PSB is the function of being watchful and alert to prevent corruption, misconduct, fraud, and other malpractices. It is the administrative machinery designed to ensure integrity, transparency, and honesty in all banking operations.

The primary goal of vigilance is not just to punish the guilty but, more importantly, to prevent wrongdoing from happening in the first place.

Vigilance meaning in Hindi​ is Satarkata (सतर्कता)

Central Vigilance Commission (CVC) of India

The Central Vigilance Commission (CVC) is the apex anti-corruption body in the Republic of India. It is an independent statutory body responsible for addressing corruption at the central level and overseeing the vigilance activities of all Central Government departments and Public Sector Undertakings (including Public Sector Banks).

Think of it as the ultimate “watchdog” institution created to ensure integrity in public administration.

Key Facts

  • Formation: It was established in February 1964 based on the recommendations of the K. Santhanam Committee on Prevention of Corruption.
  • Statutory Status: Initially, it was just an executive body. In 2003, the Parliament passed the CVC Act, 2003, which granted it statutory status, making it a powerful and independent body.
  • Headquarters: New Delhi.

Composition of the Commission

The CVC is a multi-member body consisting of:

  • One Central Vigilance Commissioner (Chairperson)
  • Not more than two Vigilance Commissioners (Members)

Appointment: They are appointed by the President of India on the recommendation of a three-member committee consisting of:

  1. The Prime Minister (Chairperson)
  2. The Minister of Home Affairs
  3. The Leader of the Opposition in the Lok Sabha

Term of Office: The term is for four years or until they attain the age of 65 years, whichever is earlier. They are not eligible for reappointment in any central or state government agency after their term.

Jurisdiction

The CVC has jurisdiction over all employees of the Central Government and public sector enterprises, including:

  • Members of All India Services (IAS, IPS, etc.) serving in the Union.
  • Group A officers of the Central Government.
  • Executives in Public Sector Banks (PSBs) from Scale V and above.
  • Executives in Public Sector Undertakings (PSUs) and other government bodies.

Key Functions of the CVC

  1. Inquire into Offences: It can inquire or cause an inquiry/investigation to be made into offences alleged to have been committed under the Prevention of Corruption Act, 1988.
  2. Superintendence over CBI: This is a critical function. The CVC has the power of superintendence over the Central Bureau of Investigation (CBI) for the investigation of corruption-related offences. This means the CBI is answerable to the CVC in corruption cases.
  3. Advisory Role: It advises various central government departments and organizations on matters relating to vigilance and disciplinary action.
  4. Overseeing CVOs: It exercises superintendence over the work of Chief Vigilance Officers (CVOs) in all central government organizations.
  5. Designated Agency for Whistleblowers: The CVC is designated as the agency to receive and act on complaints or disclosures made by “whistleblowers” under the Public Interest Disclosure and Protection of Informers (PIDPI) Resolution.

Limitations

  • Advisory Body: The CVC is primarily an advisory body. Central government departments can accept or reject its advice. However, they must provide a reason for rejecting the advice.
  • Not an Investigating Agency: The CVC does not have its own investigation wing. It depends on the CBI or the Chief Vigilance Officers (CVOs) of central organizations to investigate cases.
  • Limited Powers over CBI: Its superintendence over the CBI is limited to corruption cases and does not cover other types of crimes investigated by the CBI.

the CVC plays a pivotal role in India’s fight against corruption by promoting transparency and integrity in governance, acting as a check on administrative power, and providing a mechanism for citizens to report corruption.

2. Core Functions of a Bank’s Vigilance Department

The work of the Vigilance department is broadly divided into two key areas:

A) Preventive Vigilance (The Priority) This is about creating systems and an environment where the scope for corruption is minimized.

  • System Improvements: Identifying and plugging loopholes in procedures (e.g., in loan sanctioning or procurement processes).
  • Identifying Sensitive Areas: Pinpointing jobs or departments that are more prone to corruption and ensuring regular staff rotation.
  • Surprise Inspections: Conducting sudden checks on branches and departments to ensure rules are being followed.
  • Awareness and Training: Educating employees about anti-corruption rules, ethics, and procedures.

B) Punitive (दंडात्मक) Vigilance This involves taking action after a complaint is received or misconduct is detected.

  • Investigations: Investigating complaints of corruption, fraud, or misconduct against bank employees.
  • Evidence Collection: Gathering evidence and preparing detailed reports on the findings.
  • Recommending Action: Recommending appropriate disciplinary action (from a minor penalty to dismissal or even criminal prosecution) against erring officials to the bank’s management.

3. Vigilance Machinery

  1. Chief Vigilance Officer (CVO):
    • Senior official, usually on deputation, oversees vigilance in the organization.
  2. Central Vigilance Commission (CVC):
    • Statutory body established under the CVC Act, 2003.
    • Consists of a Chairperson and two Vigilance Commissioners.
    • Supervises vigilance activities and investigates high-value corruption cases.
  3. Central Bureau of Investigation (CBI):
    • Investigates criminal breaches, corruption, forgery, etc., through its Special Police Establishment (SPE).

4. CBI’s Role and Process

  • Key Divisions:
    • Anti-Corruption Division, Economic Offences Division, and Bank Securities & Fraud Cell (BS&FC).
  • Cases Referred to CBI:
    • High-value frauds (Rs. 6+ Crore).
    • Interstate/international ramifications.
    • Complex cases requiring external inquiries.
  • Preliminary Enquiry (PE): Verification before registering a regular case (RC).

5. Advisory Board for Banking and Financial Frauds (ABBFF)

  • Established: By CVC in consultation with RBI (2021).
  • Purpose:
    • Examines frauds involving Rs. 3+ Crore in Public Sector Banks (PSBs).
    • Advises on criminality/malafide (बदनीयत) intent of officials.
    • Ensures fair decision-making before prosecution.

6. Fraud Risk Management

  • Guidelines for Reporting Fraud:
    • Below Rs. 6 Crore: Report to State/UT Police.
    • Rs. 6 Crore and Above: Report to CBI.
    • High-Value Frauds (Rs. 50+ Crore): CVO is the nodal officer for complaints.
  • Responsibilities:
    • CMD/MD ensures compliance with RBI timelines.
    • CBI monitors progress on banking frauds of Rs. 10+ Crore.

7. Disciplinary Actions and Prosecution

  • Types of Action:
    • Criminal Prosecution: Requires sanction under Section 19 of the Prevention of Corruption Act, 1988.
    • Departmental Action: Regular Departmental Action (RDA) for major or minor penalties.
  • Sanction for Prosecution:
    • Bank’s Competent Authority decides within 30 days of receiving CBI’s report.
    • Disagreement with CBI recommendations must be referred to CVC for review.

8. Key Provisions of the CVC Act, 2003

  • Jurisdiction: Covers PSBs, financial institutions, and employees involved in corruption cases.
  • Powers:
    • Supervise investigations of corruption cases by the CBI.
    • Conduct inquiries into complaints against public officials.

9. Bank-Specific Measures

  • Fraud Prevention:
    • Employee rotation to prevent familiarity risks.
    • Surprise audits and reconciliation of accounts.
  • CBI’s Recommendations:
    • Transfer or suspend employees under investigation.

10. The “Vigilance Dilemma” in Banking

A significant challenge in banking is the “Vigilance Dilemma” or “Fear of Vigilance.”

  • The Problem: Banking involves taking calculated commercial risks. A loan can become a Non-Performing Asset (NPA) due to genuine business failure, not necessarily due to corruption. However, bank officials often fear that if a loan goes bad, they will be unfairly investigated by vigilance agencies, even if their decision was honest and commercially sound at the time.
  • The Impact: This fear can lead to “decision paralysis” or extreme risk aversion, where bank officials avoid sanctioning loans to deserving businesses, thereby slowing down economic activity.

To address this, the CVC and the government have been working on reforms to distinguish between a genuine commercial failure and a decision made with corrupt intent, aiming to protect honest bankers while punishing the dishonest.

Vigilance Awareness Week

Vigilance Awareness Week is an annual, week-long event organized by the Central Vigilance Commission (CVC) to promote integrity, transparency, and accountability in public life. It is the CVC’s flagship campaign aimed at raising public awareness about the dangers of corruption and encouraging all stakeholders to collectively fight against it.

When is it Observed?

The Vigilance Awareness Week is observed every year during the week in which the birthday of Sardar Vallabhbhai Patel (October 31st) falls. He is remembered for his immense contribution to uniting India and for his integrity in public life.

Primary Objective

The core objective is to move beyond punitive measures and focus on Preventive Vigilance. The goal is to create a culture of honesty and to educate the public and government employees, making them active participants in the fight against corruption.

Who Observes it?

The observance of Vigilance Awareness Week is mandatory for all:

  • Central Government Ministries and Departments
  • Public Sector Undertakings (PSUs)
  • Public Sector Banks (PSBs) and Insurance Companies
  • Autonomous Bodies and other Central Government organizations.

Many private sector organizations, NGOs, and educational institutions also participate voluntarily.

Key Activities During the Week

Each year, the CVC sets a specific theme for the week. Based on the theme, various activities and campaigns are organized across the country:

  1. Integrity Pledge: The week usually begins with all employees taking the “Integrity Pledge,” administered by the heads of the organizations, to uphold honesty and integrity in their work. A separate pledge is also available for citizens and corporations.
  2. Awareness Campaigns: Workshops, seminars, and lectures are conducted for employees on topics related to ethics, anti-corruption laws, and preventive vigilance measures.
  3. Public and Youth Outreach: Special efforts are made to involve the public. This includes:
    • Gram Sabhas/Meetings: To raise awareness in rural and semi-urban areas.
    • Competitions: Debates, quizzes, essay writing, slogan-making, and poster competitions are organized in schools and colleges to involve students.
  4. Customer and Vendor Meets: Banks and PSUs often organize meetings with their customers and vendors to discuss issues of transparency and how to improve systems to reduce corruption.
  5. Publicity: Banners and posters are displayed at prominent locations, and information is disseminated through journals, newsletters, and social media platforms.
  6. Highlighting Grievance Redressal: Information about the organization’s complaint handling mechanism and the role of the CVC is widely publicized.

11. Important Terms

  • CVO: Chief Vigilance Officer.
  • CVC: Central Vigilance Commission.
  • ABBFF: Advisory Board for Banking and Financial Frauds.
  • PE: Preliminary Enquiry.
  • RC: Regular Case.
  • vigil meaning​: A Period of Watchfulness or Observance. This is the most common meaning. It refers to a period of time when a person or a group of people stay awake, typically during the night, to keep watch, pray, or show support for a cause.

MCQ

1. What is the primary aim of vigilance in an organization?
a) To identify mistakes in business decisions.
b) To ensure punishment for all losses.
c) To prevent corruption and ensure integrity.
d) To monitor daily operations.

Answer: c) To prevent corruption and ensure integrity.

2. Vigilance activity focuses on:
a) Disrupting operations to find misconduct.
b) Proactive measures to prevent fraud.
c) Punishing all employees involved in losses.
d) Regular employee transfers.

Answer: b) Proactive measures to prevent fraud.

3. Who is responsible for overseeing vigilance in an organization?
a) Chief Financial Officer
b) Chief Vigilance Officer (CVO)
c) Central Vigilance Commissioner
d) Zonal Manager

Answer: b) Chief Vigilance Officer (CVO)

4. The Central Vigilance Commission (CVC) was established based on the recommendations of which committee?
a) Santhanam Committee
b) Narasimham Committee
c) Malhotra Committee
d) Mitra Committee

Answer: a) Santhanam Committee

5. Which act provides statutory status to the Central Vigilance Commission?
a) Prevention of Corruption Act, 1988
b) Central Vigilance Commission Act, 2003
c) Banking Regulation Act, 1949
d) Companies Act, 2013

Answer: b) Central Vigilance Commission Act, 2003

6. The CBI’s Special Police Establishment derives its powers from which act?
a) Indian Penal Code, 1860
b) Prevention of Corruption Act, 1988
c) Delhi Special Police Establishment Act, 1946
d) CVC Act, 2003

Answer: c) Delhi Special Police Establishment Act, 1946

7. Which CBI division handles banking and securities-related frauds?
a) Economic Offences Division
b) Anti-Corruption Division
c) Special Crimes Division
d) Bank Securities & Fraud Cell (BS&FC)

Answer: d) Bank Securities & Fraud Cell (BS&FC)

8. High-value frauds involving amounts of Rs. 50 Crore or above must be reported to:
a) RBI
b) CVC
c) CBI
d) Police Department

Answer: c) CBI

9. Fraud cases below Rs. 6 Crore must be reported to:
a) CVC
b) State/UT Police
c) CBI
d) Zonal Head

Answer: b) State/UT Police

10. Which board examines frauds involving Rs. 3 Crore or more in Public Sector Banks?
a) Central Vigilance Commission
b) Advisory Board for Banking and Financial Frauds (ABBFF)
c) Fraud Monitoring Board
d) RBI Oversight Committee

Answer: b) Advisory Board for Banking and Financial Frauds (ABBFF)

11. What is the timeline for the bank to decide on a CBI request for prosecution sanction?
a) 15 days
b) 30 days
c) 45 days
d) 60 days

Answer: b) 30 days

12. Regular Departmental Action (RDA) is recommended when:
a) Criminal prosecution is warranted.
b) Evidence is insufficient for prosecution but indicates misconduct.
c) The employee is found innocent.
d) The fraud exceeds Rs. 50 Crore.

Answer: b) Evidence is insufficient for prosecution but indicates misconduct.

13. Suspension of employees under investigation by CBI is:
a) Mandatory in all cases.
b) Recommended based on CBI’s request.
c) Decided by the RBI.
d) Done after approval from Zonal Heads.

Answer: b) Recommended based on CBI’s request.

14. What is the maximum time allowed by the Supreme Court for granting or denying prosecution sanction?
a) 2 months
b) 3 months
c) 6 months
d) 1 year

Answer: b) 3 months

15. Who appoints the Central Vigilance Commissioner?
a) Prime Minister
b) Chief Justice of India
c) President of India
d) RBI Governor

Answer: c) President of India

16. The Central Vigilance Commission has jurisdiction over:
a) Private companies only.
b) Public Sector Banks and financial institutions.
c) Judiciary employees.
d) State police forces.

Answer: b) Public Sector Banks and financial institutions.

17. What is the tenure of the Central Vigilance Commissioner?
a) 2 years or age 65, whichever is earlier.
b) 3 years or age 65, whichever is earlier.
c) 4 years or age 65, whichever is earlier.
d) 5 years or age 65, whichever is earlier.

Answer: c) 4 years or age 65, whichever is earlier.

18. Section 19 of the Prevention of Corruption Act deals with:
a) Rules for CBI investigations.
b) Granting sanction for prosecution.
c) Filing preliminary enquiries.
d) Suspension of accused employees.

Answer: b) Granting sanction for prosecution.

19. Under the Prevention of Corruption Act, prosecution sanction is required for:
a) All criminal offences.
b) Corruption-related offences by public servants.
c) Fraud cases below Rs. 1 Crore.
d) Offences against private employees.

Answer: b) Corruption-related offences by public servants.

20. Which document must be submitted to CBI during investigation referrals?
a) Original files only.
b) Certified copies of relevant documents.
c) Verbal confirmation from bank officials.
d) Internal reports without external verification.

Answer: b) Certified copies of relevant documents.

21. Employee rotation in banks is a measure of:
a) Preventive Vigilance.
b) Punitive Vigilance.
c) RDA recommendations.
d) CBI investigation.

Answer: a) Preventive Vigilance.

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