Page 36 - Banking Finance June 2019

ARTICLE

COMPLIANCE

FUNCTION IN

BANKS

he banks in India are having certain compliance The compliance function in banks is one of the key elements
T processes in place in accordance with the in corporate governance structure and it has to be
adequately enabled and made sufficiently independent.
recommendations of the Ghosh Committee
(1992). These processes and the organizational
structures through which they operate are based Many a times it has been seen that run for business has led
to compromise on the parts of compliance matters, which
on guidelines of Reserve Bank of India and their own later on turned out to be a major loss in terms of reputation
standards of internal governance. as well as legal complications.

However, the present arrangements in most of the banks So there has been a need to develop a culture of compliance
find it difficult to keep pace with the increasing complexities in day to day activities in a organization and the most
and sophistication, especially the IT related issues in the important is that, it should be spread at all the levels i.e.
present banking environment, which causes compliance risk from various controlling offices to the field i.e. branches at
and the reputational risk arising out of compliance failures various locations.
causing huge economic costs.
The Basel Committee on Banking Supervision (BCBS)
document (April 2005) says to introduce certain principle,
About the author
standards and procedures relating to compliance function.
Rajesh Ranjan Keeping in view at the operating environment in India, The
Basel Committee on Banking Supervision (BCBS) documents
Senior Manager (Faculty)
intends to articulate that the compliance function is to be
Union Bank of India
Staff Training centre, Powai, Mumbai an integral part of governance along with the internal
control and risk management process. For the compliance

36 | 2019 | JUNE | BANKING FINANCE