๐๐ญ๐ซ๐๐๐ฆ๐ฅ๐ข๐ง๐ข๐ง๐ ๐จ๐ ๐๐ง๐ญ๐๐ซ๐ง๐๐ฅ ๐๐จ๐ฆ๐ฉ๐ฅ๐ข๐๐ง๐๐ ๐๐จ๐ง๐ข๐ญ๐จ๐ซ๐ข๐ง๐ ๐ ๐ฎ๐ง๐๐ญ๐ข๐จ๐ง โ ๐๐๐ฏ๐๐ซ๐๐ ๐ข๐ง๐ ๐๐ฌ๐ ๐จ๐ ๐๐๐๐ก๐ง๐จ๐ฅ๐จ๐ ๐ฒ
Reserve Bank of India (RBI) has released a circular titled โ๐๐ญ๐ซ๐๐๐ฆ๐ฅ๐ข๐ง๐ข๐ง๐ ๐จ๐ ๐๐ง๐ญ๐๐ซ๐ง๐๐ฅ ๐๐จ๐ฆ๐ฉ๐ฅ๐ข๐๐ง๐๐ ๐๐จ๐ง๐ข๐ญ๐จ๐ซ๐ข๐ง๐ ๐
๐ฎ๐ง๐๐ญ๐ข๐จ๐ง โ ๐๐๐ฏ๐๐ซ๐๐ ๐ข๐ง๐ ๐๐ฌ๐ ๐จ๐ ๐๐๐๐ก๐ง๐จ๐ฅ๐จ๐ ๐ฒโ few months ago, providing several key insights and directives for various financial institutions in the country, as listed below :
๐๐ฌ๐ฌ๐๐ฌ๐ฌ๐ฆ๐๐ง๐ญ ๐จ๐ ๐๐ฎ๐ซ๐ซ๐๐ง๐ญ ๐๐ฒ๐ฌ๐ญ๐๐ฆ๐ฌ:
โ RBI conducted an assessment of the internal compliance monitoring systems in select Supervised Entities (SEs).
โ It was found that SEs use varying levels of automation, from macro-enabled spreadsheets to workflow-based software solutions.
โ The review highlighted that many compliance monitoring processes still involve significant manual intervention.
๐๐๐๐ ๐๐จ๐ซ ๐๐จ๐ฆ๐ฉ๐ซ๐๐ก๐๐ง๐ฌ๐ข๐ฏ๐ ๐๐จ๐ฅ๐ฎ๐ญ๐ข๐จ๐ง๐ฌ:
โ There is a need for SEs to implement comprehensive, integrated, enterprise-wide, and workflow-based solutions/tools to enhance the effectiveness of compliance monitoring.
โ Such solutions should facilitate effective communication and collaboration among all stakeholders, including business, compliance, IT teams, and senior management.
๐
๐๐๐ญ๐ฎ๐ซ๐๐ฌ ๐จ๐ ๐ญ๐ก๐ ๐๐ซ๐จ๐ฉ๐จ๐ฌ๐๐ ๐๐จ๐ฅ๐ฎ๐ญ๐ข๐จ๐ง๐ฌ:
โ The solutions/tools should include processes for identifying, assessing, monitoring, and managing compliance requirements.
โ They should be capable of escalating issues of non-compliance and require recording approval for deviations or delays in compliance submission.
โ A unified dashboard view should be provided to senior management to give an overall compliance position of the regulated entity.
๐๐ฆ๐ฉ๐ฅ๐๐ฆ๐๐ง๐ญ๐๐ญ๐ข๐จ๐ง ๐๐ข๐ฆ๐๐ฅ๐ข๐ง๐:
โ Regulated Entities (REs) are advised to carry out a comprehensive review of their existing internal compliance tracking and monitoring processes.
โ Necessary changes to existing systems or the implementation of new systems should be completed by June 30, 2024.
๐๐จ๐ง๐ข๐ญ๐จ๐ซ๐ข๐ง๐ ๐๐๐๐ก๐๐ง๐ข๐ฌ๐ฆ:
An appropriate monitoring mechanism should be put in place to review the progress of the implementation of these new systems or changes.
These directives aim to standardize and improve the internal compliance monitoring functions across various financial institutions by leveraging advanced technological solutions.
The RE, based on the size and complexity of its operations, may decide on the tools/ mechanism it would prefer to deploy for monitoring of compliance and development of the unified dashboard.
Source: https://www.rbi.org.in/