The Reserve Bank of India (RBI) has asked banks to send vital staff (bankers working in sensitive positions) on a mandatory surprise holiday for a minimum of 10 days in a single spell every year under the modified risk management guidelines. The new move is an effort to tighten its risk management guidelines. Banks need to follow the revised instructions within six months.
RBI has been periodically updating its risk management guidelines with the intention of reducing fraud. These including having a ‘maker-checker’ approach and also incorporating a policy of staff rotation.
But in the case of the Nirav Modi fraud, at the Punjab National Bank, the concerned employee managed to make fraudulent entries in the Swift system for years before the scam came to light.
"As a prudent operational risk management measure, the banks shall put in place a 'mandatory leave' policy where the employees posted in sensitive positions or areas of operation should be compulsorily sent on leave for a few days (not less than 10 working days) in a single spell every year, without giving any prior intimation to these employees, thereby maintaining an element of surprise," RBI says in its communication.
It says, “Banks should ensure that the employees, while on mandatory leave, do not have access to any physical or virtual resources related to their work responsibilities, with the exception of internal or corporate email, which is usually available to all employees for general purposes.”
According to a circular of 2011 on 'Findings of Forensic Scrutiny- Guidelines for prevention of frauds', RBI had asked banks immediately put in place 'staff rotation' policy and policy for 'mandatory leave'.
The banking regulator had first issued mandatory leave directives in April 2015 as a part of its efforts to curb fraud. But it had not clearly specified the number of days for the mandatory surprise leave, though it said it could be 'a few days (say 10 working days)'.
The central bank has updated the 'mandatory leave' policy for the employees posted in sensitive positions or areas of operation, and repealed the circular dated 23 April 2015.
Banks have been asked to prepare a list of sensitive positions to be covered under 'mandatory leave' requirements and review the list periodically. The leave would be given without any prior intimation.