Financial Compliance Crucial in India: Banks Told to Ensure Statutory Adherence
In a bid to strengthen financial compliance in the country, regulatory bodies have issued guidelines for banks to ensure adherence to all applicable statutory provisions, rules, and regulations. The move aims to prevent malpractices and promote transparency in banking operations.
Role of Regulatory Bodies
Regulatory bodies have emphasized that compliance is a shared responsibility between business units and the compliance function. This highlights the importance of effective collaboration between different departments within banks to ensure adherence to laws and regulations.
Chief Compliance Officer: Key Responsibilities
The circular specifies the eligibility criteria for appointment as Chief Compliance Officer (CCO). Key requirements include:
- Minimum 15 years’ experience in the banking or financial services sector
- At least 5 years’ experience in audit/finance/compliance/legal/risk management functions
- Suitable selection process with an appropriate evaluation/selection criteria to ensure that the appointed CCO is fit and proper
Extension of Deadline for Appointment
Recognizing the difficulties faced by banks in appointing new CCOs meeting all requirements, regulatory bodies have extended the deadline for appointment from six months to nine months. Banks are free to reappoint their current incumbents as CCOs if they meet the required criteria.
Important Considerations for Foreign Banks Operating Under Branch Model
The circular clarifies that provisions relating to the process of selection/removal/qualification, etc., would be fully applicable to foreign banks operating under the branch model. However, in respect of FBOBM (Foreign Bank Branch Office), any reference to the Board would be treated as equivalent to the Regional or Head Office Compliance.
Key Takeaways
- Banks must ensure adherence to all applicable statutory provisions, rules, and regulations.
- The compliance function is critical in ensuring that banks adhere to relevant laws and regulations.
- CCOs should have an overall experience of at least 15 years in the banking or financial services sector.
- Regulatory bodies have extended the deadline for appointment from six months to nine months.
- Banks must follow a suitable process with an appropriate selection criteria to ensure that the appointed CCO is fit and proper.