You are here: Home » Finance » News » Banks
Business Standard

RBI lays down guidelines for banks to appoint chief compliance officers

RBI laid down guidelines for appointment of chief compliance officer (CCO) in banks to ensure uniform approach with regard to compliance and risk management culture across the banking industry

RBI | Banks

Press Trust of India  |  Mumbai 

reserve bank of india, rbi

The (RBI) on Friday laid down guidelines for appointment of chief compliance officer (CCO) in to ensure uniform approach with regard to compliance and risk management culture across the banking industry.

According to an circular, the CCO should be appointed for a minimum fixed period of three years in the rank of a general manager or not below two levels of the rank of CEO.

"Such an independent compliance function is required to be headed by a designated CCO selected through a suitable process with an appropriate 'fit and proper' evaluation/selection criteria to manage compliance risk effective," the said.

Observing that the follow diverse practices in this regard, the said guidelines are meant to bring uniformity in approach followed by banks, to align the supervisory expectations on CCOs with best practices.

As per the guidelines, a CCO "may be transferred/ removed before completion of the tenure only in exceptional circumstances with the explicit prior approval of the board after following a well-defined and transparent internal administrative procedure".

The CCO, it added, should be a senior executive of the bank, preferably in the rank of a general manager or an equivalent position (not below two levels from the CEO). The CCO could also be recruited from the market.

Further, there shall not be any "dual hatting", the RBI said. In other words, the CCO "shall not be given any responsibility which brings elements of conflict of interest, especially the role relating to business".

Roles which do not attract direct conflict of interest like role of anti-money laundering officer can be performed by the CCO in those where principle of proportionality in terms of bank's size, complexity, risk management strategy and structures justifies that.

Also, theCCO should not be a member of any committee which brings his/her role in conflict with responsibility as member of the committee, including any committee dealing with purchases/ sanctions, it said.

"In case the CCO is member of a committee, he/she may have only advisory role," the guidelines said.

As per the circular, novigilance case or adverse observation from the RBI should be pending against the candidate identified for appointment as the CCO.

Selection of the candidate for the post of the CCO should be done on the basis of a well-defined selection process and recommendations made by the senior executive-level selection committee constituted by the board for the purpose, it added.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, September 11 2020. 15:45 IST