NewDeptto Mon­i­tor Banks Vi­o­lat­ingRules

The Economic Times - - Finance & Commodities -

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.

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