RBI mandates a vigilance system for private and foreign banks

In order to check the malpractices and frauds, Reserve bank of India has asked the private and foreign bank to follow the footprints of public sector banks and to appoint the chief of Internal Vigilance (CIV) by August.

In a notification the Central Bank said "In an Endeavour to align the vigilance function in private sector and foreign banks to that of the public sector banks the existing vigilance functions of a few private sector and foreign banks were mapped with the existing guidelines in the matter and it was observed that the practices vary widely among the banks."

The notification also stated "It has therefore been decided to lay down detailed guidelines for private sector and foreign banks on similar lines so that all issues arising out of lapses in the functioning of the private sector and foreign banks especially relating to corruption, malpractices, frauds etc can be addressed uniformly by the banks for timely and appropriate action."

Such a system is expected to br.ing transparency in the functioning of the banks. A CIV will be required to fulfill certain requirements and the tenure for the same will be of 3 years that can be extended to another 2 years.