Page 52 - Banking Finance June 2019

RBI CIRCULAR

RBI

CIRCULAR

Incentive for improving service to non- Risk Management System – Appointment
chest branches of Chief Risk Officer (CRO) for NBFCs

RBI/2018-19/186 RBI/2018-19/184
May 23, 2019 May 16, 2019

1. Please refer to our circular RBI/2015-16/293 DCM (NPD) 1. With the increasing role of NBFCs in direct credit
No.2564/09.40.02/2015-16 dated January 21, 2016 on intermediation, there is a need for NBFCs to augment
the captioned subject. It has been decided to allow the risk management practices. While Boards of NBFCs
large modern Currency Chests to increase the service should strive to follow best practices in risk
charges to be levied on cash deposited by non-chest management, it has been decided that NBFCs with
bank branches from the existing rate of Rs. 5/- per asset size of more than Rs.50 billion shall appoint a CRO
packet of 100 pieces to a higher rate subject to a with clearly specified role and responsibilities. The CRO
maximum of Rs. 8/- per packet. For this purpose, only is required to function independently so as to ensure
a Currency Chest fulfilling the Minimum Standards for highest standards of risk management.
a Currency Chest as detailed in our circular RBI/2018-
2. The NBFCs shall strictly adhere to the following
19/166 DCM (CC) No.2482/03.39.01/2018-19 dated April
instructions in this regard:
08, 2019 shall be eligible to be classified as a large
a) The CRO shall be a senior official in the hierarchy
modern Currency Chest.
of an NBFC and shall possess adequate professional
2. Banks may approach the Issue Office of Reserve Bank qualification/ experience in the area of risk
under whose jurisdiction the Currency Chest is located management.
for such classification. The increased rates can be
b) The CRO shall be appointed for a fixed tenure with
charged only after such classification by the Issue Office
the approval of the Board. The CRO can be
concerned. The Non-Chest bank branches linked with
transferred/ removed from his post before
such large modern Currency Chests may be advised of
completion of the tenure only with the approval
the applicability of the increased rates at least 15 days
of the Board and such premature transfer/
in advance.
removal shall be reported to the Department of
Non-Banking Supervision of the regional office of
Yours faithfully,
the Bank under whose jurisdiction the NBFC is
(Sanjay Kumar)
registered. In case the NBFC is listed, any change
General Manager
in incumbency of the CRO shall also be reported
to the stock exchanges.
52 | 2019 | JUNE | BANKING FINANCE