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Sunday, August 14, 2016

Come April 1, 2018 and Your Banker will be professionally certified


          Today there is no set of standards certificates which a Banker has to obtain to discharge his/her official duties.

          Depending on the job profile, the preferred educational qualifications are highlighted. However, the Super Regulator i.e Reserve Bank of India or any accreditation agency does not lay down mandatory qualifications.

          Come April 1st, 2018 and all this going to change. Reserve Bank of India vide its Notification No DBR.No.BP.BC.4/21.03.009/2016-17 dated August 11, 2016 changes the present approach to capacity building in Commercial Banks and All India Financial Institutions.

          The indicative list of Commercial Banks can be read here

Exim Bank, NABARD, NHB and SIDBI are defined as  All India Financial Institutions for the purpose of this RBI notification.

          Background:  The mandatory certifications requirements are the outcome of the ‘Report of the Committee on Capacity Building in Banks and non-Banks’, released by Reserve Bank of India in September 2014.

          Suggestions were invited by Reserve Bank of India to opertionalise the recommendations of the Committee.

          The first set of directions encompassing the recommendations of the committee was given under RBI Notification No DBR.No.BP.BC.4/21.03.009/2016-17 dated August 11, 2016.

          The highlight of the Notification is the obtention of appropriate Certificates by personnel manning critical departments of the banks. Of course, each employee in the Bank has an important role to achieve customer satisfaction.

          As a beginning, banks should make acquiring of a certificate course mandatory for the following areas:

Treasury operations – Dealers,  mid-office operations.

Risk management – credit risk,  market risk, operational risk, enterprise-wide risk, information security, liquidity risk.

Accounting – Preparation of financial results, audit function.

Credit management – credit appraisal, rating, monitoring, credit administration.

This does not mean that employees working in other banks need not obtain mandatory certificates. Banks are free to require certification for other areas of work also.

The employees working in the aforementioned areas should be asked to acquire certifications within a specified period, say, 6 months. This period can be extended depending on the time required for the certification. Banks should have a specific policy in place for this purpose.

To address the issues of mis-selling and to minimise customer complaints, the employees involved in marketing third party retail products and wealth management products must necessarily undergo an appropriate certification process. Where other financial sector regulators have prescribed any certifications, these must be complied with.

          As the number of employees in Commercial Banks and All India Financial Institutions is quite large, an independent accreditation agency would be useful to all the stake holders.

In this regard, the issue of setting up of an accreditation agency for assuring and accrediting learning initiatives within the banking industry, etc., is being examined separately.

As a stop-gap arrangement, Indian Banks Association (IBA) has been requested to identify in consultation with RBI and provide to its members, by end December 2016, a list of institutions and courses that will meet the certification requirements for different work areas mentioned above.

As IBA has to release the list of institutions and course by December 210, IBA may, form an expert group comprising such agencies, institutions at it deems necessary

After the release of the aforesaid list by the IBA, the banks should identify the courses/certifications that are suitable for their operations and put in place a Board approved policy, mandating obtainment of such certifications by its employees working in the respective areas.

The banks should ensure that by end-March 2017, the employees in relevant areas have commenced the process of obtaining necessary certifications.

It is expected that, w.e.f. April 1, 2018, staff will have first obtained the requisite certification before being posted in the above mentioned functional areas.

If an employee has already acquired relevant graduate, diploma and certificate courses offered by reputed universities, the same can also be considered as an accreditation/ certification. More clarity on this is expected once IBA releases its list.

The employees of Small Finance Banks and Payment Banks too will benefit from this notification. It is expected that this notification will be applicable to Small Finance Banks and Payment Banks too.

It is expected that this notification will be applicable to Regional Rural Banks too.

Recertification every three years through CPD (Continuing Professional Development) certification would enable the bankers to stay update in their chosen specialization.



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