Mumbai, Sep 11 : The Reserve Bank of India (RBI) on Friday came out with guidelines for banks to appoint Chief Compliance Officers (CCO).
In a circular, the central bank said that it has come up with the guidelines to bring uniformity in approach followed by banks, as also to align the supervisory expectations on CCOs with best practices.
“A bank shall lay down a Board-approved compliance policy clearly spelling out its compliance philosophy, expectations on compliance culture covering tone from the top, accountability, incentive structure and effective communication & challenges thereof, structure and role of the compliance function, role of CCO, processes for identifying, assessing, monitoring, managing and reporting on compliance risk throughout the bank,” it said.
As per the circular,CCO would be appointed for a minimum fixed tenure of not less than three years and the official may be transferred or removed before completion of the tenure only in exceptional circumstances with the explicit prior approval of the board after following a well-defined and transparent internal administrative procedure.
The RBI circular said that the CCO shall be a senior executive of the bank, preferably in the rank of a General Manager or an equivalent position, not below two levels from the CEO. The CCO could also be recruited from the market, and his age should not be more than 55 years.
Further, the circular stipulated that CCO shall have an overall experience of at least 15 years in the banking or financial services, out of which minimum five years shall be in the functions of ‘audit/finance/compliance/legal /risk management functions’.
“No vigilance case or adverse observation from RBI, shall be pending against the candidate identified for appointment as the CCO,” it said.
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