The has asked (UCBs) with deposits above Rs 10,000 crore to appoint a chief compliance officer (CCO) by April 01, 2023, to improve corporate governance. These are categorised as tier-4 entities.

gave tier-3 — those with deposits above Rs 1,000 crore and less than Rs 10,000 crore — time till October 01, 2023, to appoint CCO.

As for UCBs under tier-1 — with deposits up to Rs 100 crore — and tier-2 — with deposits more than Rs 100 crore and up to Rs 1,000 crore — the existing norms will continue. Under the current guidelines, compliance is one of the major responsibilities of directors and the audit committee of the board and a senior official is designated as ‘Compliance Officer’.

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RBI, in communication to chief executives of the UCBs, said this directive should be placed in the immediate next meeting of the Board of Directors for information. They should devise an implementation strategy under the board’s supervision in a time-bound manner, added.

defines compliance risk as the risk of legal or regulatory sanctions, material financial loss, or loss of reputation due to failure to comply with laws, regulations and norms applicable to its activities.

The compliance function is an integral part of effective governance, along with internal control and risk management processes.

RBI said the CCO shall have direct reporting lines to the Managing director and Chief Executive Officer (MD&CEO) and/or Board/ Board Committee. In case the CCO reports to the MD & CEO, the board or its panel will meet the CCO at quarterly intervals on a one-on-one basis, without the presence of the senior management, including the MD & CEO.

The compliance chief will not have any reporting relationship with the business verticals. Further, the board or its committee will review the performance appraisal of the CCO, it added.

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