'Whistle blowers' scheme for private, foreign banks

Special Correspondent

It will be extended to other entities in due course

MUMBAI: The Reserve Bank of India (RBI) on Wednesday announced a scheme for protection of 'whistle blowers' in all private sector banks and foreign banks. It also asked the boards of directors of these banks to frame a 'Protected Disclosures Scheme' laying down norms for protection of identity of employees making disclosures of wrongdoing and safeguarding them from any adverse personnel action.

"As a proactive measure for strengthening financial stability and with a view to enhancing public confidence in the robustness of the financial sector, the RBI has formulated a scheme called, Protected Disclosures Scheme for private sector and foreign banks," the central bank stated in a release. Complaints under the RBI scheme cover areas such as corruption, misuse of office, criminal offences, suspected and actual fraud, failure to comply with the existing rules and regulations such as the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949 and actions resulting in financial loss, operational risk and loss of reputation, detrimental to depositors' interest and public interest.

Role for customers

Under the scheme, employees of the bank concerned, customers, stakeholders and non-government organisations (NGOs) can lodge complaints.

However, anonymous or pseudonymous complaints will not be covered under the scheme and such complaints will not be entertained. The RBI will be the Nodal Agency to receive complaints and would keep the identity of the complainant secret.

If the RBI feels that the allegations are substantiated, on the basis of independent scrutiny conducted by it, it would recommend appropriate action to the bank concerned.

This scheme will be extended to other RBI regulated entities such as Primary (Urban) Co-operative Banks, local area banks and non-banking finance companies (NBFCs) in due course, the RBI added.

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