Finance Ministry instructs banks not to send festival gifts to bureaucrats

MUMBAI: The finance ministry has issued stern instructions to the heads of state-owned banks not to send gifts to bureaucrats during the festival season, a traditional practice at Diwali, as it looks to clamp down on influence peddling and stem the damage caused by a recent corruption scandal.

Some insiders say the gifts are aimed at keeping officials happy, so that the bankers can get to know about personnel changes. The current system of top management appointments at state-owned banks is quite opaque.

Senior executives are often dependent on finance ministry officials for information on people movements, including their own promotions. “This is akey reasons that bankers often shower expensive gifts on government employees,” said a retired bank chief who did not want to be named.

The letter from the finance ministry to bankers also reflects the Modi government’s determination to clean up the system that’s been rocked by corruption allegations in recent weeks. Some bankers said the arrest of Syndicate Bank chairman and managing director SK Jain by the Central Bureau of Investigation for allegedly taking bribes in return for enhancing credit limits may have led the government to send the message.

There are as many as 50-60 key government employees in the finance ministry alone and almost every chairman and managing director is in the habit of giving gifts during festivals. Most CMDs say this is merely a goodwill gesture.

“In fact, even large corporate houses give gifts to government employees. Instead of asking banks not to send gifts, they should ask government employees not to accept gifts,” said a bank chief.