RBI Permits Banks to Engage Ex-Officers for Internal Audit

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Business Mantra: Faridabad

In a notification on 25/08/2016, Reserve Bank of India, has written to all commercial Banks and have permitted to engage experienced Ex-officers for Risk Based Internal Audit (RBIA) System in Banks. This move has come in light of the demographic profile and shortage of staff to conduct internal audit. Banks have to comply with Risk based Supervision (RBS) for which RBIA is an important part.

Banks have been advised to formulate policy relating to engagement of retired officers through Bank Boards for their assistance in RBIA in line with the following conditions:

  1. Bank Board shall approve the policy with regard to engaging the officers who have retired from active service from the Bank for a period not more than three years for the purpose of RBIA. The policy has to be extensive as to terms and conditions, performance review and termination of contract thereto.
  2. Bank shall have to be very sure that such retired officers need to work under the strict supervision of higher managements, as signing of the reports will not be done by the ex-officers but existing officials.
  3. It shall also be the responsibility of the management that such retired officers are not posted in those Branches of the Bank, where they have served, in order to avoid interest conflict

Certain Banks had represented to Reserve Bank of India and had sought permission to engage the services of ex-officers for internal audit.

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