The Reserve Bank of India  (RBI) on Monday issued a framework on the compliance function and role of a chief compliance officer of some primary urban cooperative banks (UCB)

In a circular, RBI said that the board of such banks will have to ensure that an appropriate compliance policy is put in place and implemented, and prescribe the periodicity for review of compliance risk. The senior management should framne work an exercise once a year to identify and assess the major compliance risk faced by the bank and formulate plans to manage it. They must submit a review and report promptly to the board on any material compliance failure.

The circular detailed the responsibilities of the compliance department, and the broad contours of the compliance framework in urban cooperative banks. The central bak said that the minimum tenure of a chief compliance officer appointed by such banks will be not less than 3 years.

"However, in exceptional cases, the board may relax the minimum tenure by one year, provided appropriate succession planning is put in place," it said. The chief compliance officer shall be a senior executive of the bank with a position not below two levels from the chief executive officer. However, in the case of urban cooperative banks under tier-III category, this requirement can be relaxed by one level further. The chief compliance officer will be the nodal point of contact between the bank and the regulators and shall necessarily be a participant in the structured or other regular discussions held with Reserve Bank.

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