COMPLIANCE IN BANKS AND CORPORATE GOVERNANCE
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Advanced Bank Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the primary objective of a compliance function in a bank?
The primary objective is to ensure that the bank adheres to all applicable laws, regulations, rules, and standards, thereby protecting the bank from legal and reputational risks.
What is the primary responsibility of the Board of Directors in bank compliance?
Setting strategic direction and ensuring regulatory adherence
Which RBI circular formally mandated banks to establish a dedicated Compliance Department?
RBI's guidelines based on Basel Committee recommendations mandated banks to establish an independent Compliance Department headed by a Chief Compliance Officer (CCO) to manage compliance risk proactively.
What is the Basel Committee's definition of operational risk in compliance context?
Risk of loss from inadequate processes, people, systems, or external events
What is 'compliance risk' as defined by the Basel Committee on Banking Supervision?
Compliance risk is the risk of legal or regulatory sanctions, material financial loss, or loss of reputation that a bank may suffer as a result of its failure to comply with laws, regulations, rules, related self-regulatory organisation standards, and codes of conduct.
What is the role of the Risk Management Committee of the Board in banks?
Oversees risk policies, risk appetite, and integrated risk management framework
What is the role of the Chief Compliance Officer (CCO) in a bank?
The CCO is responsible for overseeing the compliance function, identifying compliance risks, reporting to the Board and senior management, and ensuring the bank adheres to regulatory requirements and internal policies.
What is 'compliance testing' in the context of bank operations?
Periodic review to verify adherence to laws, regulations, and internal policies
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