Regulatory updates

The RBI had recently carried out an assessment in select Supervised Entities (SEs)¹⁴ Supervised entities would include:
- Scheduled Commercial Banks (excluding Regional Rural Banks);
- Small Finance Banks; Payments Banks;
- Primary (Urban) Co-operative Banks (Tier III and IV);
- Upper- and Middle-Layer Non-Banking Financial Companies (including Housing Finance Companies);
- Credit Information Companies and
- All India Financial Institutions (EXIM Bank, NABARD, NaBFID, NHB and SIDBI) of the prevailing system in place for internal monitoring of compliance with regulatory instructions and the extent of usage of technological solutions to support this function. The review brought out that automation of the compliance monitoring process in SEs remains a work in progress with various aspects of this function being carried out with significant manual intervention.

Accordingly, RBI, vide a notification dated 31 January 2024 has advised SEs to carry out a comprehensive review of the existing internal compliance tracking and monitoring processes and institute necessary changes to existing systems. The systems/tools should among other things provide for the following:

• Effective communication and collaboration among all the stakeholders (by bringing business, compliance and IT teams, Senior Management, etc. on one platform)
• Have processes for identifying, assessing, monitoring and managing compliance requirements
• Escalate issues of non-compliance, if any
• Require recording approval of competent authority for deviations/ delay in compliance submission, and
• Have a unified dashboard view to Senior Management on compliance position of the SE as a whole.

The SEs should upgrade their systems by 30 June 2024 at the latest.

To access the text of the notification, please click here