Context: Recently, Reserve Bank of India has issued 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.
About the Post

• The CCO should be appointed for a minimum fixed period of three years.
• He must be appointed in the rank of a general manager or not below two levels of the rank of CEO.
• The CCO will not have any reporting relationship with business verticals nor have any business targets.
• The CCO shall not be given any responsibility which brings elements of conflict of interest, especially the role relating to business.
• He must 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.
• No vigilance case or adverse observation from the RBI should be pending against the candidate identified for appointment as the CCO.
• Selection of the candidate for the post of the CCO should be done on the basis of a well-defined selection process and recommendations made by the senior executive-level selection committee constituted by the board for the purpose.

Additional Information

• The RBI said that a bank should have a board-approved compliance policy, clearly spelling out its compliance philosophy, expectations on compliance culture, accountability, incentive structure and effective communication and challenges.
• The policy should lay a special thrust on building the compliance culture. The policy will be reviewed at least once a year.
• The compliance function will be subject to internal audit also.