Advisory Board on Banking and Financial Frauds

• 28 Aug 2023

Source: BL

Why in News?

The Central Vigilance Commission (CVC) has reconstituted the Advisory Board on Banking and Financial Frauds (ABBFF) to fortify the examination of bank fraud cases.

What is the Advisory Board on Banking and Financial Frauds (ABBFF)?

• About:
  • ABBFF serves as the first-level examination body for bank fraud cases before they are referred to investigative agencies like the Central Bureau of Investigation (CBI).
    • ABBFF is empowered to conduct periodic fraud analysis within the financial system.
  • It offers insights and policy recommendations related to fraud prevention and management to regulatory bodies like the Reserve Bank of India (RBI) and CVC.
• Composition and Tenure:
  • The reconstituted ABBFF board includes the Chairman and four other members, each contributing their expertise to fraud-related matters.
  • The Chairman and Members of ABBFF hold their positions for a tenure of two years.
• Mandatory Referrals and Advisory Role:
  • All public sector banks, insurance companies, and financial institutions are required to refer fraud cases exceeding Rs. 3 crore to ABBFF before initiating criminal investigations.
  • The advice provided by ABBFF regarding criminality and malafide (acting in bad faith or with dishonest intentions) involvement of officials must be considered by the competent authority.
  • ABBFF's purview extends to providing advisory support for cases referred by the CVC or the CBI.
• Omission of "Sun Set Clause":
  • Notably, the concept of a "sunset clause," which could have limited actions against bankers for credit decisions after a specified period, has not been included in ABBFF's functioning.

What is the Central Vigilance Commission (CVC)?

• About:
  • The Central Vigilance Commission was set up by the Government in 1964 on the recommendations of the Committee on Prevention of Corruption, headed by Shri K. Santhanam, to advise and guide Central Government agencies in the field of vigilance.
  • The Parliament enacted the Central Vigilance Commission Act, 2003 (CVC Act) conferring statutory status on the CVC.
• Members:
  • Central Vigilance Commissioner and not more than two Vigilance Commissioners, who are appointed by the President on the recommendation of a committee consisting of the Prime Minister, the Home Minister and the Leader of the Opposition in Lok Sabha.
    • They hold office for a term of four years or until they attain the age of 65 years, whichever is earlier.
• Functions:
  • The CVC receives complaints on corruption or misuse of office and recommends appropriate action.
    • Following institutions, bodies, or a person can approach CVC:
      • The central government, Lokpal, Whistle blowers.
      • It is not an investigating agency. The CVC either gets the investigation done through the CBI or through chief vigilance officers (CVO) in government offices.
      • It is empowered to inquire into offences alleged to have been committed under the Prevention of Corruption Act, 1988 by specific categories of public servants.