Banking News

RBI tells banks to improve effectiveness of tech solutions for compliance

After assessing banks’ use of technology solutions for internal monitoring of compliance with regulatory norms, the Reserve Bank of India has recommended ways to enhance effectiveness, advising lenders to make necessary changes by June 30, 2024.
“The review brought out that automation of the compliance monitoring process in SEs (supervised entities) remains a work in progress with various aspects of this function being carried out with significant manual intervention,” the RBI said on Wednesday.

The central bank’s notification was addressed to commercial banks, small finance banks, payments banks, primary urban cooperative banks, upper and middle layer non-banking financial companies, credit information companies and All India Financial Institutions. Regional Rural Banks were excluded.

The RBI noted that select entities have adopted varying levels of automation for compliance monitoring, ranging from use of macro-enabled spreadsheets to software solutions which are workflow-based.

Such tools should enable effective communication by bringing business, compliance, IT teams and senior management on one platform. Issues of non-compliance should be escalated while a provision should exist for recording the approval of competent authorities for delays in compliance, the RBI said.

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