MANU/RMIC/0055/2017

Ministry : Reserve Bank of India

Department/Board : Department of Banking Regulation

Circular No. : DBR.BP.BC.No.65/21.04.103/2016-2017
                   RBI/2016-2017/294

Date : 27.04.2017

Notification/ Circulars Referred : Circular DBOD. No. BP. 520/21.04.103/2002-03 dated October 12, 2002 MANU/DBOD/0077/2002

Citing Reference:
Circular DBOD. No. BP. 520/21.04.103/2002-03 dated October 12, 2002 MANU/DBOD/0077/2002  Referred

The Chairman and Managing Director/Chief Executive Officer
All Scheduled Commercial Banks
(Excluding Local Area Banks and Regional Rural Banks)
And
Small Finance Banks

Madam/Dear Sir,

Risk Management Systems - Role of the Chief Risk Officer

Please refer to the guidelines on Risk Management Systems issued vide our circular DBOD.No.BP.(SC).BC.98/21.04.103/99 dated October 7, 1999 and the Guidance Notes on Management of Credit Risk and Market Risk issued in terms of our circular DBOD. No. BP. 520/21.04.103/2002-03 dated October 12, 2002.

2. As part of effective risk management, banks are required, inter-alia, to have a system of separation of credit risk management function from the credit sanction process. However, it is observed that the banks follow diverse practices in this regard. In order to bring uniformity in approach followed by banks, as also, to align the risk management system with the best practices, banks are advised as under:

a. They shall lay down a Board-approved policy clearly defining the role and responsibilities of the CRO.

b. Appointment of the CRO shall be for a fixed tenure with the approval of the Board of Directors of the banks. The CRO may be transferred/removed from his post before completion of the tenure only with the approval of the Board and such premature transfer/removal shall be reported to the Department of Banking Supervision, Reserve Bank of India, Mumbai. In case of listed banks, any change in incumbency of CRO shall be reported to the stock exchanges also.