RBI Push for Compliance Management System
Vide Press Release dated 31st Jan, 2024, the Reserve Bank of India (RBI) has imposed restrictions on Paytm Payments Bank (PPBL) due to non-compliance with regulations. As of March 1, 2024, PPBL will no longer be able to accept new deposits, credit transactions, or top-ups for any customer accounts or prepaid instruments. However, existing customers can withdraw or utilize their balances without restrictions. Additionally, PPBL will cease offering all other banking services except withdrawals and must terminate its nodal accounts with other entities by February 29, 2024. This action highlights the RBI’s commitment to ensuring financial stability and protecting customer interests. This also reinforces that Compliance is the only way to conducting any sustainable business.
Further, Reserve Bank of India (RBI) has issued another crucial circular no RBI/2023-24/117 dated 31st Jan, 2024, highlighting critical gaps in compliance monitoring practices across Banks, NBFCs, and other regulated entities demanding immediate action from all regulated financial institutions. RBI observed that automation of the compliance monitoring process in Regulated Entities remains a work in progress with various aspects of this function being carried out with significant manual intervention. There is, thus, a need to implement comprehensive, integrated, enterprise-wide and workflow-based solutions/ tools to enhance the effectiveness of this function.
As per RBI, the Compliance Solution/ tool should, among other things, provide for:
- Effective communication and collaboration among all the stakeholders (by bringing business, compliance and IT teams, Senior Management, etc. on one platform);
- Have processes for identifying, assessing, monitoring and managing compliance requirements;
- Escalate issues of non-compliance, if any;
- Require recording approval of competent authority for deviations/ delay in compliance submission; and
- Have a unified dashboard view to Senior Management on compliance position of the Regulated Entity (RE) as a whole.
Accordingly, REs have been advised to carry out a comprehensive review of the existing internal compliance tracking and monitoring processes and institute necessary changes to existing systems or implement new systems latest by June 30, 2024. An appropriate monitoring mechanism is also required to be put in place to review the progress of its implementation.
Therefore, the adoption of automated compliance management system and tools can effectively address the requirements of the circular as well as pave way for robust Compliance frameworks.
How Complinity Compliance Management System can help?
Complinity is India’s Leading Compliance Management Software helping companies in the Banking, Financial Services and Insurance (BFSI) industry and many more industries to identify and address regulatory compliance risks including regulations from RBI, IRDA and other regulators more effectively. Complinity helps in not only identification and real time tracking of the compliances but also provides real time Legal Updates under all the applicable laws in India covering Central, State & Industry Specific Regulations. By automating compliance tasks and processes, compliance management software, like Complinity, can help to reduce the risk of compliance oversight and ensure that banks and financial institutions are meeting all their regulatory obligations.
You wish take the RBI Press Release and Circulars as a regulatory requirement or a wake up call – choice is yours. Alternatively, you can also take it is an opportunity to optimize your compliance function, improve risk management, and gain a competitive edge.
Don’t wait – the best time to onboard a Compliance Management Software was yesterday. The second best time is now.
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Dr. Sumit Pahwa
Co-founder & CEO
Complinity Technologies