Mandatory Requirement to adopt Software Based Compliance Management Tool by Banks

MANDATORY REQUIREMENT TO ADOPT SOFTWARE BASED COMPLIANCE MANAGEMENT TOOL BY BANKS

Reserve Bank of India (RBI) vide its Notification dated 31^st January 2024 has directed the Supervised Entities (SE) / Regulated Entities (RE) to adopt a Technological Solution to ensure Efficient and Effective Compliance Monitoring in their organizations.
RBI vide its notification has given the deadline of 30th June 2024 for RE’s to adopt the technological solution to comply with its direction.
Following type of Regulated Entities are entitled to comply with the RBI Circular to adopt the technological solution for their Internal Compliance Monitoring System:

1. 1. 1. Small Finance Bank
    2. Payment Banks
    3. Non-Banking Financial Companies (NBFC)
    4. Housing Finance Companies
    5. Scheduled Commercial Banks
    6. Primary (Urban) Co-operative Banks
    7. Credit Information Companies
    8. All India Financial Institutions

SE’s / RE’s are required to implement an automation tool for Internal Monitoring of Compliance with Regulatory Instructions. The automation tool should ensure automatic reporting and monitoring of various compliances applicable on the entities.

REQUIRED FEATURES OF COMPLIANCE MONITORING TOOL

It is mandated by RBI that the Compliance Tool implemented by SE’s / RE’s should have following features to enhance Effectiveness of Compliance Monitoring:

1. 1. 1. Comprehensive & Integrated,
    2. Enterprise-wide & workflow-based Solution

The tool should provide:

1. 1. 1. Effective Communication and Collaboration among all stakeholders (by bringing together business, compliance, IT teams, Senior Management on one platform)
    2. Have process for identifying, assessing, monitoring and managing compliance requirements,
    3. Escalate issues of non-compliance
    4. Require recording approval of competent authorities for deviation/ delay in compliance submission
    5. Have a unified dashboard view to Senior Management on Compliance Position as a whole

VARIOUS TYPES OF REGULATORY COMPLIANCES TO BE ENSURED BY SE’S OR RE’S

One Time Compliances: These are One Time Registrations / Licenses taken by the SE / RE for operating their banking business or opening a branch office. These kinds of registrations are covered under various regulations are not only covered under RBI regulations, however, also ranging from Income Tax, GST, Labour Laws.
Due Date Compliances: These are Compliances in which Due Date of Compliance Filing is fixed in the respective regulation. The SE’s / RE’s are required to file the applicable compliance on or before the prescribed Due Date.
Event Based Compliances: These are Compliances which are required to be ensured on occurrence of a pre-defined Event under the applicable regulation. SE’s / RE’s are required to keep a check on the occurrence of the pre-defined events and to ensure the respective compliance on occurrence of the said event on or before the prescribed timelines under the applicable regulation.
All Time Compliances: These are Compliances which are required to be complied at All Times by SE’s / RE’s. These regulations are to be complied with irrespective of any event or periodicity. The SE’s / RE’s are expected to have a repository of such compliances along with a mechanism of periodic monitoring and reporting of their compliances.

HOW 1-COMPLY CAN HELP SE’S / RE’S

1-Comply is an Integrated & Automation Tool for Compliance Monitoring and Reporting.
Through its various Modules, a SE / RE can monitor all its applicable Regulatory Compliances and ensure their timely compliance along with periodic auto-reporting of any deviations. Its workflow-based system ensures proactive action by the Senior Management to check and approve Regulatory Compliance and ensure accurate filing.

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