Strengthening Corporate Governance in Urban Cooperative Banks by RBI
The Reserve Bank of India has asked all large Urban Co-operative Banks (UCBs) to appoint Chief Compliance Officers and put in place a board-approved policy and a Compliance Function for meeting regulatory norms. While the UCBs with deposits of more than Rs 10,000 crore (Tier 4 UCBs) will have to comply with the directions by April 1, 2023, those with deposits of more than Rs 1,000 crore and up to Rs 10,000 crore (Tier 3 UCBs) have been given time till October 1, 2023.
Compliance risk is the risk of legal or regulatory sanctions, material financial loss or loss of reputation a UCB may suffer as a result of its failure to comply with laws, regulations, rules, and codes of conduct applicable to UCBs activities.
As per RBI, as part of the overall structure for corporate governance, the compliance function serves a critical role. Compliance Function shall ensure strict observance of all statutory and regulatory requirements for the UCB, including standards of conduct, managing conflict of interest, treating customers fairly and ensuring the suitability of customer service.
