He said it would be flawed to term the decisions taken without any malafide or monetary gains as criminal misconduct.
Singh's comments came in the backdrop of cases registered by CBI in coal and other recent scams.
"While actions that prima-facie show malafide intent or pecuniary gain should certainly be questioned, pronouncing decisions taken with no ill-intention within the prevailing policy as criminal misconduct would certainly be flawed and excessive," Singh said at an international conference organised by CBI here on the occasion of its Golden Jubilee.
Asking the agency to take great care while probing matters related to policy and administrative decisions, Singh said, "Policy-making is a multi-layered and complex process in the government and it would not be appropriate for a police agency to sit in judgement over policy formulation, without any evidence of malafide".
He said in order to insulate public servants from apprehensions of "ill-informed inquiry or investigation" and allow them to take decisions based on their judgements "lines of confidence" must be drawn between investigating agencies and honest officers.
"It is also important that errors of judgement are distinguished from criminal acts. As I have said on earlier occasions, decision making in a world of uncertainty is a risky operation and some decisions which appear sensible ex- ante may ex-post turn out to be faulty. Our administrative set up has to be so managed that the fear of the unknown must not lead to paralysis in decision making," he said.