Page 53 - Banking Finance June 2019

RBI CIRCULAR

c) The Board shall put in place policies to safeguard relating to timely reconciliation of transactions (i.e.
the independence of the CRO. In this regard, the ATM cash replenishment) between the bank, the
CRO shall have direct reporting lines to the MD & service provider and its sub-contractor have been
CEO/ Risk Management Committee (RMC) of the examined. Accordingly, it has been decided that the
Board. In case the CRO reports to the MD & CEO, bank shall follow the procedure as under:
the RMC/ Board shall meet the CRO without the a) Cash indents by the Service Provider shall be made
presence of the MD & CEO, at least on a quarterly at least a day in advance (T-1 where T is the day
basis. The CRO shall not have any reporting of cash loading), in consultation with the chest /
relationship with the business verticals of the NBFC nodal branch. Multiple points of cash withdrawal
and shall not be given any business targets. may be avoided and shall be restricted to one in
Further, there shall not be any ‘dual hatting’ i.e. each centre. However, metropolitan centres may
the CRO shall not be given any other responsibility. have two points of cash withdrawal.
d) The CRO shall be involved in the process of b) Reconciliation of transactions shall be done
identification, measurement and mitigation of between the bank, the service provider and its sub-
risks. All credit products (retail or wholesale) shall contractors at least on a T+3 basis.
be vetted by the CRO from the angle of inherent
c) In the event of a dispute or the reporting of alleged
and control risks. The CRO’s role in deciding credit
/ attempted breach of security / laid down
proposals shall be limited to being an advisor.
procedures, access to video footage of the ATM
e) In NBFCs that follow committee approach in credit may be provided by the bank to the service
sanction process for high value proposals, if the provider and its sub-contractors on request.
CRO is one of the decision makers in the credit
2. Further, as a part of outsourcing arrangements for cash
sanction process, the CRO shall have voting power
management, the bank shall encourage their service
and all members who are part of the credit
provider and its sub-contractors to:
sanction process, shall individually and severally be
a) put in place an efficient digital records
liable for all the aspects, including risk perspective
management system for data retrieval and
related to the credit proposal.
reconciliation.
3. Master Direction - Non-Banking Financial Company -
b) create and maintain a data base of employees at
Systemically Important Non-Deposit taking Company
industry level through any unique mode / code of
and Deposit taking Company (Reserve Bank) Directions,
identification by the Self Regulatory Organisation
2016 has been modified accordingly.
to ensure that they possess unblemished records.
Yours faithfully,
Yours faithfully,
(Manoranjan Mishra)
(Sanjay Kumar)
Chief General Manager
General Manager
Outsourcing of Cash Management –
Priority Sector Lending – Targets and
Reconciliation of Transactions
Classification
RBI/2018-19/183 RBI/2018-19/179
May 6, 2019
May 14, 2019

1. As stated in para 15 of the monetary policy statement 1. Please refer to Para 10 of the Statement on
dated October 04, 2016, the Bank had constituted a Developmental and Regulatory Policies of the First Bi-
Committee on Currency Movement [Chair: Shri D.K. Monthly Monetary Policy Statement 2019-20 dated
Mohanty, Executive Director, Reserve Bank of India] to April 4, 2019 and Para 9 of Master Direction – Regional
review the entire gamut of security of the treasure in Rural Banks (RRBs) - Priority Sector Lending – Targets
transit. The recommendations of the Committee and Classification dated July 7, 2016/Para 5 of the

BANKING FINANCE | JUNE | 2019 | 53