Sunday, April 30, 2017

Compliance with Ghosh Committee Recommendations

It has now been decided that henceforth the compliance to Ghosh committee recommendations need not be reported to the audit committee of the Board. However Banks are advised to ensure that the recommendations are duly complied with and compliance to these recommendations are made a part of the Internal Audit. It is also expected that the recommendations are incorporated in the manual of instructions too.
Such guidelines were also issued with respect to Jilani committee recommendations vide rbi circular dated 28/4/16.
Based on rbi circular dated 20/04/2017. For any further clarification in the matter please refer

Friday, April 28, 2017

SARFAESI Act - Requirement of Net Owned Fund (NOF) for ARCs.

It has been decided to fix the minimum NOF requirement for ARCs at Rs.100 crore on an ongoing basis with effect from the date of the Notification.
NOF shall be arrived at by reducing the following items from owned funds. 

i.           investments of the ARC in shares of –
a.     its subsidiaries;
b.     companies in the same group;
c.      all other ARCs; and

ii.           the book value of debentures, bonds, outstanding loans and advances made to, and deposits with, -
a.     subsidiaries of the ARC; and
b.     companies in the same group,
to the extent such amount exceeds 10% of the OF.

The Minimum NOF of Rs. 100 cr should be achieved by 31st March 2019.
Based on RBI circular dated 28/04/2017. For any further clarification please visit  

Thursday, April 27, 2017

Role of the Chief Risk Officer (CRO)

In order to bring uniformity in approach and to align the risk management system with the best practices, banks are advised to:

·        Lay down a Board-approved policy defining the role and responsibilities of the CRO.

·        CROs shall be appointed for a fixed tenure. Any change before the completion of the tenure shall only be with the approval of the Board which shall be reported to RBI. In case of listed banks, any change in incumbency shall also be reported to the stock exchanges.

·        CRO shall be a senior official and shall have the necessary qualification and experience in risk management.

·        The CRO shall report directly to the MD & CEO / Risk Management Committee (RMC) of the Board. RMC shall meet the CRO without the presence of the MD & CEO, at least once in a quarter.

·        The CRO shall not have any reporting relationship with the business verticals of the bank and shall not be given any business targets.

·        In case the CRO is associated with the credit sanction process, it shall be expressed clearly whether the CRO’s role would be that of an adviser or a decision maker. The policy shall include the necessary safeguards to ensure the independence of the CRO.

·        In banks that follow committee approach in credit sanction process, if the CRO is one of the decision makers, he shall have voting power and all other members, shall individually and severally be liable. If the CRO is not a part of the credit sanction process, his role will be limited to that of an adviser.

·        In banks which do not follow committee approach, the CRO can only be an adviser in the sanction process.

·        The CRO in his role as an adviser shall be an invitee to the credit sanction/approval committee without any voting rights.

·        The CRO shall not be given the responsibility of any other function.
Based on RBI circular dated 27/04/2017. For any further clarification, please refer