Banks’ compliance culture far from satisfactory: RBI director-general MK Jain

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Published: August 21, 2019 3:08:01 AM

The two-day event concluded on Tuesday. He further added that since the global financial crisis in 2008 to 2020, penalties and fines imposed on banks for lack of compliance is well expected to cross $400 billion.

Bank, RBI, director general, MK Jain, industry news, Ficci, Reserve Bank of India, bank fraud, RBI governor, RBI repo rateRBI director-general MK Jain (File Photo)

Indian banks’ track record on compliance is far from satisfactory and frauds unearthed in recent years could have been avoided with better compliance, Reserve Bank of India (RBI) deputy governor (DG) MK Jain said on Tuesday. Stating that commercial banks would need some “serious efforts” to improve their compliance procedures, Jain informed that the central bank between January and July this year has penalised commercial banks on 70 different occasions and imposed fines amounting to nearly Rs 122 crore.

“A good compliance culture can benefit banks in many ways — lower organisational risk, increased confidence among employees and better relationships with regulators and investors,” Jain said at Fibac 2019, an annual event organised by industry body Ficci and the Indian Banks’ Association. The two-day event concluded on Tuesday. He further added that since the global financial crisis in 2008 to 2020, penalties and fines imposed on banks for lack of compliance is well expected to cross $400 billion.

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“Some of the big losses made by banks due to frauds could have been escaped with better compliance,” Jain observed, adding that the function of compliance is a shared responsibility of every staff of the bank and the tone needs to be set from the top. A lot of improvements are needed in the compliance culture as it is an important function in the safe and sound functioning and has an impact on a bank’s risk profile, he said.

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