Page 27 - Banking Finance December 2022

ARTICLE

COMPLIANCE

CULTURE IN

BANKS: A KEY

TO SUSTAINABLE

BANKING

he Reserve Bank of India (RBI) imposed a prudential norms set by the regulators, the perpetration of
T monetary penalty amounting to Rupees 40 frauds and money laundering can be reduced to a great
lakhs on a Public Sector Bank in June 2021 for
extent if the banks and their employees strictly adhere to
non-compliance with KYC and antimoney
laundering guidelines issued by RBI. This is not the only case compliances and laid down procedures.
of penalties being imposed on banks for non-compliance by The institution of Banking is of great significance in society
the RBI, in fact, the RBI has imposed penalties on several and for the nation. They date to ancient times and have
other banks including Private, Public Sector and Cooperative continuously prospered and developed with the modern era.
Banks as well during this quarter. Such types of penalties Banks are essential to the nation’s financial system and
seads a wrong message in the public about the bank. control a major portion of the money supply. They deal in
public money and have a huge responsibility towards the
Compliance is defined as the act of conforming to laws, rules, stakeholders viz customers, regulators, employees, and
regulations, standards, specifications, various codes of shareholders.
conduct including the voluntary ones and the organization’s
own internal rules, policies, and procedures. By following They face a big challenge of being misused for money
laundering and subsequent crimes like drug trafficking and
terror financing which follow. Banks are interconnected and
About the author the failure of one bank may lead to systemic risk and create
a huge crisis for the financial system in a country and
Baljor Datt Gaur sometimes even across multiple countries. That is why the
Faculty banks are highly controlled institutions in the country and
State Bank Institute of Credit & Risk
they have to mandatorily comply with many regulations,
Management, SBICRM, Gurgaon
laws, and policies. In case of noncompliance, they are
BANKING FINANCE | DECEMBER | 2022 | 27