NewDeptto Monitor Banks ViolatingRules
Mumbai: The RBI will set up an enforcementdepartmenttomonitor banks that violate regulations. Theenforcementdepartmentwill startoperationsfromApril1,2017, the bank said in a statement issued with its bi-monthly policy on Wednesday.
“As of now, each department of the RBI takes action against banks for violation of rules. RBI now proposes to have it centralised in one department,” a senior RBI official said. “This will help RBI follow up and maintain a record on banks performance,” he added.
RBI said that regulation, surveillance and enforcement are three important facets of financial sector oversight mechanism. Regulations deter mine the framework in which financial entities function so that prudence, transparency, and comparability are ensured on one hand and customer interests are protected on the other. Currently, in RBI, there is a clear demarcation of the regulatory and surveillance functions, which is not the case with enforcement.