Need of Compliance for Banks

As Banks do the business, they are also required to comply with the necessary compliances applicable to them especially under the Banking Regulation Act, 1949. For this, they engage Professional Firm like CCL who can help them stay compliant in their day-to-day business. Not only this, they are required to check their clients companies’ compliance just to access that their clients are good companies and not involved in the money laundering, black money, and other illicit forms of earning money.

Search Report for Banks

CCL provides Search Reports to Banks which works as a basic tool for inspection of company’s records in the hands of Banks. As the non-compliance is growing in India Inc., Banks are under apprehension if their money will become NPA (Non-performing Assets) and now more stressing upon Search Repots from Companies while opening any Bank Accounts or giving the Loan or Credit Facilities to such Companies. The requirement for Search Reports are huge by banks as they keep them safe, help them understanding past records to know the complete history and information about the company and their way to conduct business.

The Search Report also ensures that the company is not the defaulting one and does not have the defaulting directors.  If you are a company director or part of the company management or manager in any bank who is looking for search report, we can be reached at info@ccoffice.in and/or +91-9988424211.

Due Diligence for Banks

The purpose of the Due Diligence Report for Banks is to examine the records of a borrowing entity to assess borrowers conduct from governance perspective and to check the compliance of the entities which are into consideration for availing loans and other credit facilities.

Due Diligence assists banks to examine the previous and existing lending of the companies and to know the defaulting status of any of the directors and its company in in past. This makes banking safe and also give comfort to bankers whenever they have to add new clients in its branch portfolio.

Banks ask companies to get a Due Diligence Certificate from Professionals specifically the Company Secretaries as mentioned in the RBI Notification issued dated 10.02.2009 vide Notification no. DBOD. NO. BP.BC.110/08.12.001/2008-09. Due Diligence Report also confirms whether the company has complied with all the provisions of the Companies Act, 2013 and its applicable rules.

Charge Creation, Modification & Satisfaction

Normally, all the companies need funds to run the business and survive in the economic crisis. The CCL plays very significant role on all the parts in all charge related compliance in connection with the companies who are looking to borrow money from banks for the purpose of its business. When they borrow money the lender normally insists for securities meaning thereby whenever any security is given for the purpose of obtaining loan a charge is created in favor of the lender. Also, every time, there is any change in the Charge form filed, the change must be submitted again with MCA.

The loan may be borrowed by one charge holder or it may be from two charge holders or more as in case of consortium. Whenever any loan is taken on consortium, the Banks normally insists creation of charge separately in respect of all charge holders. Compliance Calendar LLP can help to companies as well as banks in the compliance related to charge creation, modification, and satisfaction of charges.

RBI stepping in to engage Company Secretaries for Banks

Understanding the importance of professionals like Company Secretaries, RBI has released a discussion paper on 12th June 2020, on ‘Governance in Commercial Banks in India’ for public comments. This discussion paper came out with various services to be provided by Professionals to banks especially Company Secretaries.

RBI Discussion Paper – From Company Secretary Perspective:

1. Appointment of Company Secretary for Banks

• All banks whether listed or otherwise, shall have a Company Secretary who is bound by the professional standards of a Company secretary.

• The Secretary shall report to the Chair of the board.

2. Performance assessment and Roles of the company secretary

• shall be undertaken by the NRC provided by the Chair of the board.
• work closely with the compliance function of the bank.
• distinct separation of roles, duties, and reporting lines.
• The management of the bank shall not be involved in performance assessment.

3. The role of the head of compliance function is

• specific to the role expected of the bank being an RBI regulated entity while the role of the company secretary is to be defined by the fact that a bank is also a company or body corporate.

4. Responsibility of the Company Secretary

• ensure that the management makes available the agenda items within the time frame stipulated by the board, its committees, and
• the minutes of the meetings of the board as well as the committees of the board are recorded as per the professional standards required.

5. Secretarial Audit Applicability

• All banks including those not listed and/ or operating as branches shall undertake secretarial audit in line with provisions of section 204 of the Companies Act, 2013 the scope of which shall include compliance to guidelines/directions emanating from this Discussion Paper.

• The Secretarial Audit report shall be made available to the ACB which shall have an oversight over compliance to various gaps reported by the audit.

6. Compensation of the functionaries in the Company Secretariat

• shall be recommended jointly by ACB as well as NRC and approved by the board.

Full Discussion Paper can be downloaded from the below link:

Click here to download the same from RBI Official website