RBI sets up another group on bank inspection

RBI sets up another group on bank inspection
ENS ECONOMIC BUREAU

MUMBAI, NOV 29: Even as a host of inspection reports have piled up in the Reserve Bank of India's vaults without any action, the RBI has constituted a seven member multi-disciplinary working group to look into introduction of risk-based internal inspection and audit in banks in the country.

The group, which is expected to submit its report by January 31, next is to suggest modifications with regard to the existing internal audit practices in banks which might be required to implement the shift in focus to risk based approach and outline a time frame and sequence of measures required for implementation of its recommendations. However, the formation of the panel assumes significance in the wake of the rising non-performing assts (NPAs) which has now soared past the Rs 60,000 crore mark.

According to union sources, RBI has not taken action on inspection reports of several banks in the last five years. "Inspection reports are also kept secret like the loan defaulters,'' said a banking source.

The group is to examine the applicability of the risk-based internal audit and propose the methodology for implementing the shift in focus from transaction to risk based approach and prepare guidelines to be issued to the banks with regard to risk assessment methodology and audit plan, the RBI said here in a release.

Adherence to the internal operational guidelines and procedures has gained more importance in recent Times in view of the deregulatory process initiated by it in imporatant areas of banking operations, particularly in regard to prudential concerns and risk management practices, the RBI said.

The RBI said recent international experience has also highlighted the need to have risk based internal inspection and audit in banks. The Basel committee on banking supervision in a consultative paper in July last had emphasised on risk focussed internal audit, the RBI said.

Institute of Chartered Accountants of India president G Sitharaman is the committee chairman. The other members are chief general manager-in charge K L Khetarpaul, chief general manager A L Narasimhan (from RBI), Bank of India general manager N L Ajwalia, Bank of Baroda General Manager N S Srinivasan, State Bank of India deputy general manager R Nagarajan and RBI DGM R M Thakkar.

Networth rule for Net trading to go
Mumbai:In a bid to popularise internet trading, the Securities and Exchange Board of India (SEBI) will waive the condition of minimum of Rs 50 lakh networth for brokers joining the net based trading platforms.

``Internet based broking will help small and medium size brokers to face competition effectively. The rule of minimum worth of Rs. 50 lakh will be waived for those joining the shared net broking,'' Sebi chairman DR Mehta said at the launch of DotEx, shared platform of net trading here today. DotEx is a joint venture between NSE.IT, a subsidiary of National Stock Exchange (NSE) and I-flex, Bangalore-based infotech firm.