Rbi Warns Foreign Banks Over Delay In Filing Of Periodic Returns

In a stern warning to all foreign banks operating in the country, the Reserve Bank of India (RBI) has made it clear that they would be liable to penal action if they continue with the practice of delay and/or non-submission of periodic Department of Supervision by Banks (DSB) returns to the central bank as part of the offsite monitoring and surveillance system designed by RBI in consultation with the commercial banks themselves.

The apex bank has said that these returns are being called for under section 27(2) of the Banking Regulations Act, 1949, and any delay in the filing of returns or non-submission of returns would attract penalty under Section 46 of the Act.

 

The Reserve Bank of India has also advised that all foreign banks nominate a senior officer of the general manager rank who would be responsible for the compilation of the data so that the returns could be submitted in time to the apex bank.

The Reserve Bank has asked the foreign banks to convey the name of the so-appointed officer to it immediately.

This was conveyed by the RBI to the chief executive officers of all foreign banks by way of a recent circular.

In the circular, the apex bank has stated that for ensuring the smooth functioning of the supervisory reporting system of the central bank, the system of filing returns to the department of supervision of the Reserve Bankby the commercial banks had been introduced in consultation with the banks themselves. Under this system of offsite monitoring and surveillance by the central bank, foreign banks are required to file periodic returns in five separate formats.

This reporting system was formally introduced with effect from the quarter-ended December, 1995.

The apex bank had also, through, workshops, training sessions and written communications, attempted to familiarise banks with the system.

A detailed booklet comprising a guidance note was also prepared and circulated to the banks concerned. But, according to the Reserve Bank of India circular, considerable delay in the filing of returns still persists. The apex bank has, therefore, decided to come down strictly on the erring banks. RBI has clearly pointed out that foreign banks should submit the entire set of returns in time and, if any of them, have not been received, the returns shall not be considered as having been received in time.

It has therefore warned all foreign banks that efforts should be made to submit the returns within the prescribed time limit in order to avoid attracting penalty. This move by the apex bank to tighten offsite vigilance of commercial banks, especially foreign banks, comes soon after the Reserve Bank of India had asked foreign and private banks to tighten their internal vigilance systems by setting up the audit committees.

These audit committees, which will comprise at least three members, would meet at least six times a year and at least once in every quarter to examine the reports placed by the central bank, external and internal auditors.