RBI to Set up Separate Enforcement Department

Reserve Bank of India has decided to set up an enforcement department to speed up regulatory compliance. Department will be operational from next financial year. It will mainly deal on penalties imposed on banks for violation of norms.

RBI is Setting up Separate Enforcement Department

Functions of RBI՚s Enforcement Department

  • Enforce Department (ED) will speed up regulatory compliance of banks.
  • It will primarily deal with issues related to penalties imposed on banks for violation of norms.
  • At present penalties are decided by banking and non-banking supervision departments of RBI.

Background

  • Regulation, enforcement and surveillance are three most important facets of financial sector oversight mechanism.
  • Regulations determine framework in which financial entities function so that transparency, prudence and comparability are ensured on one hand and customer interests are protected on other.
  • Surveillance is process through which adherence to regulations is monitored.
  • Currently RBI has a clear demarcation of surveillance and regulatory functions, but it was not in case with enforcement of rules.

Recent steps by Union Government to reform banking sector are

  • Bank Board Bureau (BBB) was established by replacing Appointments Board.
  • In Union Budget 2017 - 18, an infusion of ₹ 10,000 crore in public sector banks for recapitalization purposes.
  • Insolvency and Bankruptcy Board (IBBI) of India notified three sets of regulations under Insolvency and Bankruptcy Code, 2016 to deal with non-performing assets.

About RBI

  • Central banking organization in India.
  • Controls financial policy around Indian rupee.
  • Founded on 1st April 1935 during the British Rule.
  • Nationalized on 1st January 1949.
  • Four headquarters are at Mumbai, Kolkata, Chennai, and New Delhi.
  • Leading member of Alliance for Financial Inclusion.
  • It has 19 regional offices, most of them in state capitals and 9 Sub-offices.
Objective & Main Functions of RBI

Examrace Team at Aug 21, 2021