What changed
RBI reviewed compliance monitoring in select entities and found automation levels varied, with significant manual intervention still common. The central bank now mandates a comprehensive review and implementation of integrated, workflow-based compliance solutions by June 30, 2024. Entities must also set up a monitoring mechanism to track progress.
What it means for you
Banks and lenders must move from spreadsheets or partial automation to full, enterprise-wide compliance systems. This will reduce manual errors, improve audit trails, and give senior management real-time visibility into compliance status. Non-compliance with the deadline could invite regulatory scrutiny.
What you must do
- Conduct a comprehensive review of your current compliance tracking and monitoring processes immediately.
- Implement or upgrade to an integrated, enterprise-wide, workflow-based compliance solution by June 30, 2024.
- Ensure the solution includes a unified dashboard for senior management, escalation of non-compliance, and approval recording for deviations.
- Establish a monitoring mechanism to track implementation progress and report to the board or senior management.
Who it affects
Scheduled Commercial Banks (excluding RRBs), Small Finance Banks, Payments Banks, Primary (Urban) Co-operative Banks (Tier III and IV), Upper- and Middle-Layer NBFCs (including HFCs), Credit Information Companies, All India Financial Institutions (EXIM Bank, NABARD, NaBFID, NHB, SIDBI)
What is the deadline for implementing the new compliance system?
The deadline is June 30, 2024, for completing the review and instituting necessary changes or implementing new systems.
Do we need to buy a specific software or can we build our own?
RBI allows entities to decide on the tools based on size and complexity, but the solution must be comprehensive, integrated, enterprise-wide, and workflow-based.
What happens if we miss the June 30 deadline?
RBI has not specified penalties, but non-compliance may lead to regulatory action or increased scrutiny during inspections.