Compliance culture in banks not satisfactory, says RBI’s Jain

Penalties of ₹123 crore levied on banks over seven months

August 20, 2019 10:38 pm | Updated 10:51 pm IST - Mumbai

CHENNAI, TAMIL NADU, 25/01/2017: Mahesh Kumar Jain, MD & CEO, Indian Bank, at a press conference in Chennai on January 25, 2017. 
Photo : Bijoy Ghosh

CHENNAI, TAMIL NADU, 25/01/2017: Mahesh Kumar Jain, MD & CEO, Indian Bank, at a press conference in Chennai on January 25, 2017. Photo : Bijoy Ghosh

The Reserve Bank of India (RBI) has come down heavily on commercial banks after slapping a series of penalties for not complying with several regulatory guidelines.

Speaking at the FICCI-IBA banking seminar, RBI Deputy Governor in-charge of banking supervision M.K. Jain said that the compliance culture in the banking system was far from satisfactory.

‘Can benefit banks’

“It is important for banks to demonstrate good compliance culture… We appreciate the procedures to incorporate compliance culture,” Mr. Jain said, adding a good compliance culture can benefit the banks in many ways.

He said following the global financial crisis, the importance of compliance had increased significantly, particularly in the areas of know-your-customer, anti-money laundering and appropriateness of banking products, among others.

Between January and July this year, the banking regulator had imposed penalties worth about ₹122.9 crore on 70 occasions on banks for non-compliance, he said.

“A bank or a financial institution can suffer if it does not adhere to laws, rules, regulations and related self-regulatory standards or even codes of conducts applicable to its banking activities,” Mr. Jain said.

He also said some of the banking frauds — for which banks had suffered big losses — could have been avoided if they had had ‘good compliance culture’.

Top News Today

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.