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banking regulation

Navigating Regulations: 5 Types of Regulatory Reporting for Banks

“Regulatory reporting is a fundamental aspect of banking operations. It involves the meticulous preparation and timely submission of periodic reports to regulatory authorities, which are instrumental in monitoring and supervising the functioning of banks.

These reports serve the dual purpose of ensuring the safe and sound operation of banks and providing regulators with the essential data to evaluate the overall health of the banking system.”

Image credits: Nelito.com 

Why do Banks require Regulatory Compliance?

Administrative detailing might be thought of to ensure that banks comply with all the laws set to input. Be that as it may, compliance isn’t –and ought to not be looked as– as it were lawful prerequisites since it incorporates moral guidelines and social obligation.

Banking regulatory compliance describes the set of standards and practices banking institutions must adopt to remain in compliance with industry regulations and other relevant legislation.

Regulatory compliance in banking can be applied to a wide range of industrial factors, including:

  • Security and information security
  • Risk management
  • Information processing
  • Data reliability
  • Ethical conduct

Regulatory reporting is a crucial aspect of banking operations, ensuring transparency, stability, and compliance with guidelines.

Let’s delve into five types of regulatory reporting that banks must adhere to:

The Central Repository of Information on Large Credits (CRILC), established by the Reserve Bank of India (RBI), plays a pivotal role. Banks are required to submit data on borrowers with aggregate exposures of INR 5 crore or more. These exposures are categorized as standard, sub-standard, doubtful, or loss assets. The goal is to identify and resolve stressed assets promptly within the banking system. Strict quarterly reporting deadlines are enforced, and non-compliance may lead to penalties. 

The Suspicious Transaction Reports (STR) are critical for Banking regulations and compliance. These reports are filed when transactions are suspected to be related to illegal activities such as terrorism financing or money laundering. Banks must maintain monitoring systems to identify suspicious transactions and promptly report them to regulatory authorities. The timely and accurate filing of STRs is essential for upholding the financial system’s integrity. 

Banks must comply with the Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) requirements. SLR mandates the percentage of assets that banks must hold in liquid form (such as government securities), while CRR specifies the proportion of deposits that banks must maintain with the RBI. Regular reporting ensures adherence to these ratios

Non-Banking Financial Companies (NBFCs) involved in the co-origination of loans with banks must submit reports. Co-origination refers to joint lending by banks and NBFCs. Accurate reporting facilitates effective risk management and collaboration between these entities. 

The asset classification reporting expects Banks must diligently classify their assets (loans and advances) based on their quality (standard, sub-standard, doubtful, or loss). This classification directly impacts capital adequacy and risk assessment. 

Administrative announcing is the orderly handling of collecting and submitting data about an organization’s monetary and operational exercises to administrative specialists. These reports cover a wide range of information, counting monetary articulations, chance presentations, client data, and exchange points of interest.

Understanding the concept of administrative announcing in venture-keeping money is imperative for checking and administering monetary education, such as banks, protection companies, and speculation firms.

Detailing reports offer assistance controllers to survey an organization’s compliance with legitimate and administrative prerequisites. These reports are especially pivotal in:

Budgetary Solidness

After the 2008 worldwide retreat, controllers around the world expanded their accentuation on gathering exact and incite information from budgetary teach. This data permits specialists to distinguish potential dangers and take remedial activities sometime recently they raise and imperil the soundness of the budgetary framework.

Speculator Security

Announcing that’s both convenient and straightforward ensures that financial specialists can get to exact and current data with respect to an organization’s money-related well-being. This, in turn, helps them in making well-informed venture choices. Such straightforwardness is imperative for maintaining trust and certainty within the monetary markets.

Hazard Administration

Productive administrative announcing helps money-related education in more viably identifying and overseeing dangers. It empowers associations to assess their presentation of distinctive sorts of dangers, count credit, showcase, and operational dangers, and take appropriate measures to decrease them. This hazard moderation is significant for guaranteeing the long-term supportability of the association.

Legitimate Compliance

Monetary education is subject to various laws and directions, and administrative reports help them in displaying their compliance with these prerequisites. Non-compliance with administrative detailing commitments can lead to legitimate results, counting fines and sanctions.

Compliance with these regulatory reporting requirements is vital for maintaining the stability and integrity of the Indian banking system.

Implications of Regulatory Compliance 

The Bank of England’s (BoE’s) “Future of Finance” report assessed that compliance with administrative announcing costs UK banks £2 billion–£4.5 billion per year. The UK controllers have a longer-term desire to streamline administrative detailing and make information collection and utilization more effective for themselves and the banks. 

Within the EU, the European Managing an Account Specialist (EBA) has presented a pathway for more proportionate supervisory reporting and the European Securities and Markets Specialist (ESMA) has distributed an information procedure that incorporates an objective to decrease administrative announcing compliance burden. 

“The RBI plays a central part in overseeing these announcing forms by issuing comprehensive rules covering different viewpoints, counting capital ampleness, resource quality, liquidity, and benefit. Banks are ordered to yield these reports to the RBI in endorsed groups and inside stipulated timelines. Compliance with these RBI rules for administrative announcing is crucial for keeping up the solidness and keenness of the Indian keeping money framework.”

References 

Limited, N. S. P. (2018, February 1). 5 Types of regulatory reporting for banks. Nelito | Blog. https://www.nelito.com/blog/5-types-of-regulatory-reporting-for-banks.html (11) Regulatory reporting for banks: why is it important? | LinkedIn. (2022, October 21). https://www.linkedin.com/pulse/regulatory-reporting-banks-why-important-trans-world-compliance/