RBI directs Private and Foreign banks to tighten up internal vigilance systems for prevention of frauds, corruption and malpractices

Vigilance is an inseparable part of management. It promotes clean business transactions, professionalism, productivity, promptness and transparent practices and ensures putting in place systems and procedures to curb opportunities for corruption which results in improving efficiency and effectiveness of the personnel as well as the organization. These factors make it mandatory to have a dedicated vigilance setup in the banking industry.

The practices on internal vigilance vary widely among the Private sector and Foreign Banks. Reserve bank of India has decided to lay down detailed guidelines for private sector and foreign banks on similar lines so that all issues arising out of lapses in the functioning of the private sector and foreign banks especially relating to corruption, malpractices, frauds etc can be addressed uniformly by the banks for timely and appropriate action.

These detailed guidelines are aimed towards bringing about uniformity and rationalisation in the function of internal vigilance. An officer of suitable seniority is required to be designated as Chief of Internal Vigilance (CIV) who will head the Internal Vigilance Division of the bank concerned.

Private sector and Foreign Banks are advised on 26th May 2011 to put in place a system of internal vigilance machinery as per the guidelines within a period of three months with the approval of the Board. A compliance report to this effect may be submitted to RBI on or before August 31, 2011.

India CEOs of foreign banks will be now responsible for regulatory and statutory compliance


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