COMPLIANCE POLICY

PRESENTATION BY STAFF
COLLEGE, CHENNAI.

COMPLIANCE LAWS
BANKING REGULATION ACT
RESERVE BANK OF INDIA ACT
FOREIGN EXCHANGE

MANAGEMENT ACT
PREVENTION OF MONEY
LAUNDERING ACT
COMPANIES ACT
INCOME TAX ACT. ETC. ETC

COMPLIANCE GUIDELINES
RBI
SEBI
IRDA

COMPLIANCE STANDARDS
VOLUNTARY
IBA
BCSBI
FEDAI
FIMMDA

COMPLIANCE CODE OF
CONDUCT
BOOK OF INSTRUCTIONS
MANUALS
CIRCULARS

CONSEQUENCES OF NON
COMPLIANCE
Non observance of these guidelines

would result in penal sanctions or

monitory loss or loss to reputation
besides adverse publicity for the
defaulting banks.

COMPLIANCE RISK
Compliance Risk, which is a risk

arising out of non compliance of

laws, rules and standards, would
have adverse impact on earnings
and capital
and erosion
of
stakeholders
and
customers
confidence and relationship with
the regulators, apart from restrictions
on future business opportunities.

COMPLIANCE RISK
Compliance Risk is also referred to

as integrity risk since Banks

reputation is linked to the dealings
with adherence to the principles of
integrity and fair play.

COMPLIANCE STARTS AT
THE TOP
In order to inculcate the best corporate compliance

culture, the Board as well as the Top Management will lead

by example by setting the right tone for others to emulate.

The Top Management shall stress the need for effective

compliance at every available opportunity in order to

highlight its importance.

The

Board members and Senior Management shall

participate in Compliance Committee activities to ensure
direct involvement in the Banks compliance efforts.

COMPLIANCE
MANAGEMENT
Compliance

Management would involve identifying,

evaluating and addressing legal and reputational risks as
well as monitory losses.

This will enable to study the business lines and activities of

our Bank as a whole and help us to identify the activities in

one area of the Bank that may affect the legal and
reputational risks of other business lines as well as the Bank
as a whole.

Identify where the risk is concentrated.

COMPLIANCE FUNCTIONS
All the functionaries, irrespective of

the cadre, shall adhere to all the

applicable laws, rules and standards
prescribed for conducting the
business effectively.

COMPLIANCE FUNCTIONS
The primary focus of compliance function

shall be on the regulatory compliance,

statutory compliance, compliance with
fair practice codes and other codes
prescribed / suggested by self regulatory
organizations,
government
policies,
banks internal policies, procedures, rules
and guidelines as well as prevention of
money laundering and funding of illegal
activities.

COMPLIANCE FUNCTIONS
As the Bank is also engaged in other

activities, such as insurance, mutual

funds, etc, it is bound by the
directions received from other
regulators (IRDA, SEBI, etc). The
compliance function shall attend to
such directions also.

COMPLIANCE FUNCTIONS
Oversee and ensure that function

wise compliance manuals / check

lists are developed in co-ordination
with various departments and
provided to the concerned staff
associated with the respective
functions to enable them to prevent
errors before they occur and
discharge their duties effectively.

COMPLIANCE FUNCTIONS
Be a friend, philosopher and guide

for all the business units and shall

guide the business units for effective
compliance.
Give suitable instructions to ensure
that the level of compliance by the
staff at various levels is reckoned at
the time of their performance
appraisal.

COMPLIANCE FUNCTIONS
The compliance function and the audit
function shall be kept separate without any
overlapping of their functions.

COMPLIANCE STRUCTURE
Compliance

is the backbone of
corporate governance in every
organization and hence every
individual staff
Every individual staff, irrespective of
the cadre, is a compliance officer to
the extent of the compliance
requirements expected of him / her.

1. Compliance and other departments in

Central Office
2. Field General Manager offices
3. Regional Offices
4. Branches + Extension Counters in India
5. Currency Chests
6. Central Clearing Offices
7. Star Centres
8. Depository Participants
9. Overseas branches and Representative
Offices
10. Lead Bank offices
11. Regional Inspectorates
12. Staff Training Centres
13. Regional Rural Banks

COMPLIANCE STRUCTURE
Overall responsibility of the Head of the

Department / branch / office / unit to

ensure
that
all
the
compliance
requirements relating to their functions
are met without any deviations.
It will be necessary in larger units to have
a supportive mechanism to help the
functional head in ensuring effective
compliance, such units shall nominate an
official as Compliance Officer .

COMPLIANCE STRUCTURE
CENTRAL OFFICE DEPARTMENTS
FILED GENERAL MANAGERS

OFFICE
REGIONAL OFFICES
WILL DESIGNATE A CHIEF / SENIOR
MANAGER TO BE THE COMPLIANCE
OFFICER

COMPLIANCE STRUCTURE
STAFF TRAINING CENTRES:
The Head of Training Centers shall be the

Compliance Officer of the respective

centers.

In respect of Compliance function, he

shall report directly to the Head of

Compliance under advice to the
Principal, Staff College, Chennai.

COMPLIANCE STRUCTURE
In order to avoid conflict of interest,

Compliance Department shall oversee

the compliance aspects of Inspection
Department in Central Office as well as
Regional Inspectorates.

Inspectorates. However, it shall be the

primary responsibilities of the heads of

these offices to ensure compliance
aspects relating to their functions.

COMPLIANCE COMMITTEE
The Operational Risk Management

Committee (ORMC) formed under

Operational
Risk
Management
Policy shall also act as Compliance
Committee to address important
compliance issues relating to the
Bank.

COMPLIANCE DEPARTMENT
IDENTIFYING AND ASSESSING ON A PROACTIVE
BASIS THE COMPLIANCE RISKS ASSOCIATED WITH
THE BANKS VARIOUS BUSINESS ACTIVITIES

advising the management on the

applicable laws, rules and standards,

coordinating in establishing written
guidance to staff
assessing the appropriateness of internal
procedures and guidelines
promptly following up any identified
deficiencies

COMPLIANCE DEPARTMENT

monitoring compliance with the policy by

performing regular and comprehensive compliance
risk assessment and testing,
exercising any specific statutory responsibilities
serving as focal point for the Banks staff for seeking
clarifications /

liaising with relevant external bodies,

formulating necessary formats for reporting

PROCESS FLOW & PROCEDURE

Compliance is ensured by way of self

assessment in respect of each aspect at

periodical intervals and as an ongoing
basis.
On
the
basis
of
self-assessment,
necessary certificates shall be submitted
to the reporting authorities
the primary ownership of compliance ,
data integrity , accuracy and its reporting
shall lie with the concerned Compliance
Officer

COMPLIANCE CERTIFICATES
The formats of certificates and periodicity

shall be provided by the Head of

Compliance
The
certificates
furnished
by
the
Compliance Officers are subject to
scrutiny by the Inspectors during the
internal inspection.
The Head of Compliance shall formulate
the methodology and the reporting
formats for the Compliance Officers to
carry out the self-assessment and
submission of the certificates.

IDENTIFICATION, ASSESSMENT,
MONITORING & RISK MANAGEMENT
Compliance Department shall, on a pro-active

basis, identify, assess the compliance risks

associated with the business activities, products
and processes and shall document the same.

The Compliance Officers in departments and in

Regional Offices shall assist in identifying the

compliance issues relating to their field of
activity and document them.

They shall take steps to mitigate the risks in

coordination with Compliance Department.

NEW PRODUCTS

Whenever any new product or process is

introduced, the same shall be referred to
Compliance Department before launching
for thorough analysis from the view point of
regulatory and statutory aspects as well as
to put in place the checks and balances
for mitigating any compliance risks
associated therewith.

UPDATES
Compliance

Department
shall
periodically circulate the instances
of compliance failures amongst the
staff with proper guidelines to
prevent such instances.

INSPECTION REPORTS
Inspection and audit reports, including

the annual inspection reports, concurrent

audit reports, Long Form Audit Reports, RBI
Inspection Reports, AFI, RMs Visit reports,
etc are the key feedback mechanism for
the Compliance Department to assess the
level of compliance and the areas of
compliance failures in the branches /
departments / units.

CATEGORISATION

Compliance Department shall categorize

the compliance issues as High, Medium
or Low risks and also subject such issue to
the Frequency and Severity tests. This
would enable the Bank to mobilize
resources and focus on the compliance
issues that demand appropriate attention
to mitigate the risks.

REPORTING

Head of Compliance shall submit a

monthly report on the position of
compliance to the senior management /
CMD. A quarterly report on the compliance
position shall be placed to ACB.
Annual Review on compliance function
shall be prepared and placed before ACB.

ROLE OF INTERNAL AUDIT /

INSPECTION

It shall identify the areas where there is

need for improvements and also point out
the critical failures in compliance function.

The Internal Audit / Inspection of

branches / departments / offices /

units shall cover the veracity of the
compliance certificates submitted
by them.

GUIDANCE, EDUCATION,
TRAINING & COMMUNICATION
Adequate

training commensurate
to the requirement of the functions
carried out shall be provided by the
Staff College in coordination with
Compliance Department.