Concerned over the way the foreign banks are functioning in the country, the Reserve Bank today said that their Indian Chief Executive Officers (CEOs) would be responsible for oversight of regulatory and statutory compliances.
"It has been decided that for all foreign banks operating in India, the CEO would be responsible for effective oversight of regulatory and statutory compliance as also the audit process and the compliance thereof in respect of all operations in India," the RBI said in a notification.
The notification comes amid reports of fraud in branches of leading foreign lenders like Citibank and Standard Chartered Bank. As many as 34 foreign banks including global leaders like HSBC and Deutsche Bank are having operations in the country.
RBI has also expressed concerns about "the adequacy of regulatory compliance by foreign banks in India" and the practice of the unit heads of foreign banks reporting directly to Functional Heads located outside the country and not to the Indian CEOs.
It further noted that Indian operations of foreign banks functioning in India as branches of the parent banks generally do not have a separate Audit Committee vested with the responsibility of examining and reviewing inspection reports for their compliance.
Following the notification which was communicated to all foreign banks, their CEOs will be responsible for compliance with the norms of the central bank.