Guidelines for Banks to Appoint Chief Compliance Officers

  • The Reserve Bank of India (RBI) laid down guidelines for appointment of chief compliance officer (CCO) in banks to ensure uniform approach with regard to compliance and risk management culture across the banking industry.
  • According to an RBI circular, the CCO should be appointed for a minimum fixed period of three years in the rank of a general manager or not below two levels of the rank of CEO.
  • Observing that the banks follow diverse practices in this regard, now these guidelines are meant to bring uniformity in approach followed by banks, to align the supervisory expectations on CCOs with best practices.
  • As per the guidelines, a CCO “may be transferred/ removed before completion of the tenure only in exceptional circumstances with the explicit prior approval of the board after following a well-defined and transparent internal administrative procedure”.
  • The CCO could also be recruited from the market.
  • the CCO “shall not be given any responsibility which brings elements of conflict of interest, especially the role relating to business”.
  • the CCO should not be a member of any committee which brings his/her role in conflict with responsibility as member of the committee, including any committee dealing with purchases/ sanctions.
  • In case the CCO is member of a committee, he/she may have only advisory role.