RBI directs banks to enforce 'mandatory leave' policy for staff

Coming down heavily on banks for not implementing mandatory `staff rotation' policy and a policy of `mandatory leave' in order to safeguard against possible frauds, the Reserve Bank of India (RBI) has directed all banks that employees posted at sensitive areas be compulsorily asked to avail of one-time leave of about 10 days every year.

The RBI directive follows an earlier instruction to all banks following 'Findings of Forensic Scrutiny- Guidelines for prevention of frauds', in terms of which banks were advised to immediately put in place 'staff rotation' policy and policy for 'mandatory leave' for staff. However, RBI noted that banks have failed to effectively implement the policy of 'mandatory leave', leading to an increase in operational risk across banking sector.

In its directive to banks, RBI said, ''as a prudent operational risk management measure, it is imperative that employees posted in sensitive positions or areas of operations (viz, treasury, currency chests, risk modelling, model validation, etc) are covered under a 'mandatory leave' policy wherein such employees are required to compulsorily avail of leave for a few days (say 10 working days) in a single spell every year, during their posting in such areas.''

RBI has asked bank to identify such highly sensitive positions where the bank will, without any prior intimation, advise the employee to be away from his desk for a specified number of working days each year.

While the employee is on 'mandatory leave' or asked to be away from his desk as above, it should be ensured that he does not have access to any physical or virtual resources related to his work responsibilities, with the possible exception of corporate email, RBI directed banks.

Banks should immediately put the arrangements in place and implement the same without fail. RBI said banks should themselves prepare an exhaustive list of sensitive positions or areas of operations to be covered under 'mandatory leave' and under 'away from desk' requirement, duly approved by the board of directors or committee of the board, and the incumbents of these positions should be kept aware of the above requirements.

Implementation of such policy would be covered under the Pillar 2 review of banks' risk management system by the Reserve Bank of India.'