Internal Compliance Monitoring: RBI's Single Dashboard Circular for Banks & NBFCs

Regulated Entities (RE) must periodically ensure compliance with the RBI’s Circulars and Directives. A streamlined compliance process and thorough internal compliance monitoring are essential. The RBI Circular on 31 January 2024 provided a five-month deadline for a new directive for using technology to have a dashboard in place. 

Read the article to learn how banks and NBFCs can seamlessly integrate robust monitoring tools and mechanisms for a single dashboard by June 30, 2024.

What does the RBI Circular 117/2023-24 say

The RBI circular RBI/2023-24/117, dated 31 January 2024, directs RE to adopt and implement tools/mechanisms for monitoring all applicable compliances. It advocates that RE deploy a single/unified dashboard for better internal compliance monitoring. The Circular would apply based on the size and complexity of its operations.

The tool/mechanism should do the following:

• Bring all stakeholders on one platform, showing all compliances in one place.
• Create a workflow for identifying, assessing, monitoring, and managing compliance requirements. 
• Escalate all non-compliances to the right stakeholder.
• Have a unified dashboard view for senior management on the compliance position of the regulated entity.

What is Internal Compliance Monitoring?

Internal compliance monitoring is the act of continuously assessing within the RE whether it is complying with the regulatory requirements, including internal policies and specific industry standards. Its goal is to help enterprises achieve consistent regulatory compliance and avoid non-compliance.

Internal monitoring of compliance assures that your team follows company policies and procedures. While internal auditing ensures that the necessary controls are in place, it’s through monitoring that one can determine whether or not staff are following those controls in their daily activities. This helps enterprises guard against liability, data breaches, and costly penalties.

Applicability of the RBI Circular 117

The following list of RE types must comply with the RBI Circular:

• Small Finance Banks (SFB)
• Payments Banks
• Non-Banking Financial Companies (NBFC) (ML and UL)
• Housing Finance Companies
• Scheduled Commercial Banks (SCB)
• Primary (Urban) Co-operative Banks (Tier III and IV)
• Credit Information Companies
• All India Financial Institutions

Deadline to comply with the RBI Circular 117

The time limit to comply with the RBI Circular is June 30, 2024. REs are advised to thoroughly review and update their internal compliance monitoring and tracking processes, making necessary adjustments to the existing systems or implementing new systems by June 30, 2024.

Bottlenecks currently faced by Banks & NBFCs

Given the complexities of compliance regulations, is it possible to comply easily with the RBI Circular? Let’s examine how complicated the compliance structure is for an RE in India.

An RE faces the following challenges while ensuring compliance with the regulatory requirements-

High penalties & strict enforcement

• The Board of Directors must have proper internal control systems u/s 134 of the Companies Act, failing which the Company and Officer in Default are liable to pay a penalty
• Indian laws have hefty monetary penalties & imprisonment

Tracking of numerous legal updates

• Distinct Departments and Ministries for different laws publish updates on different websites, making it difficult for the Compliance Officer to keep track of the updates
• Legal changes in the form of notifications and circulars are difficult to comprehend

Dissemination of legal updates across the teams & all entities

• Need for cross-functional collaboration
• Each function manages its own checklist and formats
• Scattered repositories as proofs of compliance are kept separately by each department
• Reporting and dashboards are for department/unit 

Productivity adversely affected

• The lack of visibility of future activities leaves the team with last-minute activities, thereby reducing efficiency
• High chances of error due to lack of automation 

Inadequate process

• Missed timelines for certain compliance due to inadequate reminders
• No escalation matrix in place

How can Clear help REs comply with the RBI Circular 117

All that the REs need is Clear Compass, a one-stop solution for all law compliance powered by automation.

Get a unified dashboard for your RE: 

Get a single dashboard with different views at the company/unit/departmental level and a personalised calendar. Users can clearly see distinctions in compliance, such as statutory or internal,  overdue/impending/upcoming compliance (depending on the due date of the compliance), and compliance based on law/department.

• Automated tracking
• Email alerts on pending Activities
• 24/7 Access: Anytime, Anywhere Cloud Access
• Easy reference to the regulations

Identify and monitor compliance with the activity list:

View various stages of activity such as pending/completed/reassigned. You can function with multiple approvers with maker and checker and export activities on doer/approver. All closed activity moves to the records page automatically.

• Tracking the status of each activity
• Promote delegation: Once finalised, ready to approve
• Quality, standard outputs: Ideal for multi-company usage

Have compliance report in place:

Download a report based on compliance status. Once completed and approved, all activities get synced automatically. From within the solution, notify relevant team members via email regarding the completion of the activity. Export all documents created from the tool.

• Readily Accessible
• Easy-to-use