The Finance Ministry has directed public sector banks and financial institutions to ensure prompt reporting of vigilance-related matters concerning their whole-time directors (WTDs) and board-level officials. The directive from the Department of Financial Services (DFS) addresses growing concerns over delayed disclosure of critical adverse information about senior appointees.

Background of the Directive

The ministry's action follows several instances where adverse information about board-level appointees was not promptly reported to relevant authorities. In many cases, critical adverse inputs including private complaints, court observations, references from the CBI, or inputs from other law enforcement agencies were being reported only when vigilance clearance was specifically sought from Chief Vigilance Officers (CVOs) of public sector undertakings.

The advisory, issued earlier this month, highlighted that in certain cases, crucial information relating to WTDs was omitted in vigilance clearance formats on the grounds that no specific column existed for such disclosure.

Key Requirements for Financial Institutions

The DFS has established comprehensive reporting requirements for public sector banks and financial institutions:

Mandatory Disclosure Components

Financial institutions must now submit comprehensive disclosures in vigilance clearance processes that include:

• Observations or directions from courts or tribunals
• Internal committee findings
• Audit observations of a serious nature
• Communications from any government department or enforcement agency

The ministry emphasized that CVOs must ensure vigilance clearance reflects the most updated and accurate status as of the date of issuance, with no material information being suppressed.

Recent Enforcement Action

The directive gains significance following the government's unusual decision earlier this year to demote Union Bank of India Executive Director Pankaj Dwivedi to General Manager of Punjab & Sind Bank. The demotion was implemented due to an ongoing case in the Delhi High Court, where it was alleged that his appointment as Executive Director violated regulations due to lack of proper vigilance clearance.

Compliance Expectations

The Finance Ministry has made clear that strict compliance in vigilance matters is expected from all public sector undertakings. The directive emphasizes that omission of any significant information, particularly information relevant to decisions relating to appointments, promotions, board-level postings, and placement of WTDs, constitutes a matter of serious concern requiring immediate corrective action.

This latest order from the Finance Ministry requires public sector banks and financial institutions to immediately report vigilance matters concerning board-level directors. The move comes in response to instances where adverse information disclosure was delayed, highlighting the government's commitment to maintaining transparency and integrity in the financial sector's top management.

M&M Financial Services has announced a significant addition to its leadership team. The company's Board of Directors has approved the appointment of Mr. Parag Rao as an Additional Director in a non-executive and non-independent capacity, effective December 10, 2025.

Key Appointment Details

Background and Experience

Mr. Parag Rao brings over three decades of diverse experience in the Banking and FMCG sectors to M&M Financial Services. His appointment follows a recommendation by the company's Nomination and Remuneration Committee, highlighting the strategic nature of this addition to the board.

Professional Highlights

• HDFC Bank Association: Mr. Rao has been with HDFC Bank since 2002, where he has managed multiple P&Ls and led large Pan-India teams.
• Leadership in Payments: Since 2010, he has played a crucial role in establishing and maintaining HDFC Bank's market leadership in the payments and acquiring spaces.
• Technology and Digital Transformation: He headed the Technology & Digital Transformation function at HDFC Bank, driving the bank's technology and digital transformation agenda.
• Product Management: Recent responsibilities included heading the liability product management group of HDFC Bank.

Board Experience

Mr. Rao's expertise extends to various board positions, including:

• HBL Global (HDFC Bank's Sales Subsidiary, later merged with HDB Financial Services)
• HDFC Ergo (Non-Life Insurance subsidiary of HDFC Bank)
• National Payment Corporation of India (NPCI)

Additionally, he has served on the Asia Pacific Client Council of VISA Inc and the Global Advisory Board of Diners International Inc.

Educational Background

This appointment underscores M&M Financial Services' commitment to strengthening its board with experienced professionals from the financial services sector. Mr. Rao's extensive background in banking, digital transformation, and product management is expected to bring valuable insights to the company as it navigates the evolving landscape of financial services in India.