In a follow up to the report of the Joint Parliamentary Committee, Reserve Bank of India advised banks to take immediate action on the recommendations of the advisory group on banking supervision to strengthen management information system and internal control mechanism.
JPC in its report had endorsed the recommendations of the group headed by M S Verma on sound corporate governance and said these suggestions be implemented expeditiously, RBI said in Mumbai in a notification to the banks.
The JPC report on stock market scam has observed that it was imperative for banks to follow strategies and techniques, which were basic to the tenets of sound corporate governance, including capable and experienced directors, efficient management coherent strategy and clear lines of responsibility and accountability.
Some of the recommendations by the Verma panel relate to strengthening of risk management framework, review of connected lending, constitution of committees, strategic business plan and improvement in internal control systems.
Bank boards should modify their approach towards internal controls so that they have a firmer say in the maintenance and improvement of internal control systems, it said. More awareness also needs to be promoted among senior management in regard to security, risk and controls in computerised environment, it added.
