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The Reserve Bank of India (RBI) on Friday put emphasis on a ‘strong compliance culture’ among banks, saying there should be a strong system to rectify errors.
‘“We are not worried that there are certain deviations...but you must have a system to identify there is something wrong and rectify it immediately,” K C Chakrabarty, deputy governor, RBI said on the sidelines of an event here. “That part (rectification system) is missing and I think that is one of the reasons why we don’t have a strong compliance culture,” he further said.
For better compliance, he said the banks should have a compliance policy, structure, manual, properly identified people and an internal audit as well. He said there are at least 54 laws which affect the banking business directly or indirectly. Plus, there are other regulatory compliances, so it is very necessary to have proper compliance. Compliance, he said, acts like a lubricant which runs the business machinery of a bank.
Chakrabarty was speaking in reference to the recent sting operations carried out on banks by portal Cobrapost, which accused them of money laundering. “There is no revelation in that. Their only revelation is that in this country, there is black money and banks are....actually you don’t require a sting operation for that.” He said penalties on other banks were underway but refused to give a timeline for the same.
Chakrabarty said hedging was a must for foreign currency loans. “I take a European Central Bank loan but I don’t hedge…it is an independent corporate decision but what happens to the country’s foreign exchange position when there is a problem?” Chakrabarty said, adding “Many things which can be good for the individual might not be good for society.”
When asked about his views on various other issues like the depriciating rupee and new bank licenses, Chakrabarty said, “Wait for the governor’s press conference on 30th (July) and ask him all the questions.”
RBI is scheduled to announce its first quarterly monetary policy on July 30.
