What Is Banking Compliance?

The Financial Sector Of India

According to IBEF (www.ibef.org), the Indian banking system houses 12 public sector banks, 22 private sector banks, 46 foreign banks, 56 regional banks, 1485 urban cooperative banks, and 96,000 rural cooperative banks, in addition to cooperative credit institutions. This widely spread web of banking and non-banking financial institutions, or NBFCs, form an integral part of the country’s economy and play a crucial role in the smooth functioning of all matters related to money, directly and indirectly.

The financial sector, which encompasses banking and NBFCs, was valued at USD 2.48 trillion. Of this, USD 1,602.65 billion was the value of public sector banks, and USD 878.56 billion was that of the private sector. The difference between public sector and private sector banks is that in the case of public sector banks, 50% or more of the bank’s shareholding rests with the centre or state government, giving the government a majority stake in the bank. Examples of public banks in India include the State Bank of India, Union Bank of India, Punjab National Bank, etc. On the other hand, private banks include DCB Bank, Yes Bank, HDFC Bank, etc.

Significance of the Reserve Bank Of India

The important thing to note about both the public sector and private sector banks is that both sectors are regulated and governed by the Reserve Bank of India, which is the apex authority responsible for the regulation of the banking sector. Its main functions include:

Being the monetary authority that formulates, implements, and monitors the monetary policy
Being the primary regulatory and supervisory body of the financial system, prescribing broad parameters of banking operations and compliance in banks
Managing foreign exchange as per the prescribed law
Issuing and circulating currency
Being a banker to the government and a banker to the banks

The RBI is also responsible for imposing penalties and fines upon banks that do not follow banking compliance regulations laid down by the law. In a recent case, the RBI imposed heavy liabilities on 14 banks, ranging between Rs. 50 lakh–Rs. 2 crore for violation and contravention of regulatory norms. This is where the importance of banking compliance can be understood.

What Is Compliance?

According to Shri M.K Jain, Deputy Governor, RBI, “Compliance is defined as the act of following laws, rules, regulations, and various codes of conduct including the voluntary ones. Although most of these arise from external requirements, following the organisation’s own internal rules, policies, and procedures, and acting by ethical practices is equally important. A strong compliance culture should also ensure adherence to fair practice codes, manage conflicts of interest, and treat customers fairly, with the larger objective of delivering efficient customer service. Thus, compliance shall go beyond what is legally binding and embrace broader standards of integrity and ethical conduct.”

From this excerpt of the Deputy Governor’s speech, one can glean the significance of banking compliance. In the case previously mentioned, the RBI issued notices to those 14 banks, seeking a show cause as to why they should not be penalized for non-compliance with the Banking Regulation Act of 1949. And failure to do so attracted significant penalties.

A Job In The Financial Sector

There are many opportunities to explore for fresh graduates looking to make their career in the banking sector. The banking sector offers many lucrative jobs, from investment banking to commercial banking to financial advisories. However, a career in banking entails a lot of responsibility and technical know-how.

Aspirants must possess the technical know-how and domain knowledge associated with the field. This includes banking fundamentals, regulatory environment; risk and financial compliance; generic banking products and services; mandate-specific products and services, and so on. Apart from these hard skills, one must also possess analytical abilities, effective communication skills, problem-solving abilities, general ethical practices, and customer service.

Additionally, one must possess a certain level of adaptability and willingness to learn. This is even more true in the ever-changing and ever-evolving economic environment. With the advent of new technologies, more and more banks have now started using technology to their advantage. By using artificial intelligence, machine learning, blockchain etc., banks can run their operations more efficiently and effectively.

The need to update their processes was further propelled when more and more businesses and individual customers began using digital banking for their day-to-day banking needs. This created the need for employees who are proficient with their domain knowledge and comfortable and willing to learn new processes. Therefore, one must constantly endeavour to learn and upskill themselves to stay ahead of the competition. And given that it is the banking sector we are talking about, there is no shortage of competition.

DCB Banking Certification Course

So how can one stay ahead of the game? Well, one such way is by getting certified. The DCB Banking Certification Course is a rigorous 15-day training program that equips the learners with not only the required domain knowledge but also hones the necessary soft skills. The Certification Course in Banking Management is ideal for freshers looking to break into the banking sector as it comes with an assured job with DCB Bank. It is also suitable for those who are early into their banking careers and are looking to polish their skills. With a salary of Rs. 2.5 LPA and several attractive incentives, the DCB Banking Certification Course is sure to be a start in one’s CV, add significant value to one’s overall profile and make them an ideal candidate for a job in the banking sector. So what are you waiting for? Head to TimesPro to learn more about the DCB Banking Certification Course and begin your professional journey today!

Know More: https://earlycareer.timespro.com/course/short-term-dcb-programme/