RBI asks REs to review internal compliance tracking, monitoring processes

Mumbai, Jan 31, 2024 

The Reserve Bank of India (RBI) on Wednesday asked the Regulated Entities (REs) to conduct a comprehensive review of the existing internal compliance tracking and monitoring processes and institute necessary changes to existing systems or implement new systems by June 30, 2024, at the latest.

An appropriate monitoring mechanism may also be put in place to review the progress of its implementation, the RBI said.

Based on an assessment conducted on select Supervised Entities (SEs), the regulator noticed varying levels of automation used to support internal monitoring, ranging from the use of macro-enabled spreadsheets to workflow-based software solutions.

However, the banking regulator observed that automation of the compliance monitoring process in SEs is still a work in progress, with various aspects of this function being carried out with significant manual intervention.

“There is, thus, a need to implement comprehensive, integrated, enterprise-wide, and workflow-based solutions/tools to enhance the effectiveness of this function,” the RBI said.

The tool used for internal compliance monitoring should provide for effective communication and collaboration among all stakeholders.

According to the regulator, the tool should have processes for identifying, assessing, monitoring, and managing compliance requirements, and escalate issues of non-compliance. It must also have recording approval of competent authority for deviations/delay in compliance submission and have a unified dashboard view to Senior Management on the compliance position of the Regulated Entity (RE) as a whole.

Furthermore, the RE, based on the size and complexity of its operations, is allowed to decide on the tools or mechanisms it would prefer to employ for monitoring compliance and development of the unified dashboard.

[The Business Standard]