Subsequent to the financial crisis, the focus on compliance has gone up significantly, especially in the area of conduct, KYC/AML, suitability and appropriateness of banking products offered to a specific customer. In this context, and acknowledging the benefits offered by a good compliance culture and costs of poor conduct, the compliance culture of Indian banks needs to be strengthened.
During the course of the supervisory process, the Reserve Bank has observed various lacunae in the compliance culture of Indian banks. Some of the weaknesses and irregularities observed have been recurring in spite of the averments made by bank managements having carried out remediation. My expectation from the banks is that they make serious efforts towards overall improvement of their compliance function.