The Reserve Bank of India (RBI) on Friday issued new guidelines for banks to tighten their compliance functions and ensure that chief compliance officers (CCOs) follow the best industry practices as required by supervisory expectations.
Banks currently follow diverse practices in this regard, it said.
"The policy should lay special thrust on building up compliance culture, vetting of the quality of supervisory and regulatory compliance reports to RBI by the top executives, non-executive Chairman and Chairman and Audit Committee of the Board (ACB) as the case may be."
The policy should be reviewed at least once a year, said the RBI.
Besides, banks need to have a board-approved compliance policy clearly spelling out its compliance philosophy, expectations on compliance culture taking into account accountability, incentive structure, and effective communication and challenges.
In addition, the central bank said the CCO should be appointed for at least three years and the ACB, Managing Director and Chief Executive Officer should factor in this requirement while appointing a CCO.
The CCO could also be recruited from the market with age not more than 55 years and overall experience of at least 15 years in the banking or financial services. Of this, a minimum of five years should be in the related management functions, said the RBI.
( With inputs from ANI )
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