MUMBAI: Thanks to high-value frauds in banks, Reserve Bank of India has asked lenders to implement a mandatory leave requirement, which will compel a large number of bankers to spend quality time with their families. Mandatory leave requirement is a policy which is in place in most multinational banks. This policy is also present in some private banks but is limited to staff handling sensitive positions. Mandatory leave is an integral part of risk management because it enables a peer review of the job done by an employee in his absence. In most cases, the mandatory annual leave is for a minimum period of 10 days. Citi already has a mandatory leave policy and so do other foreign banks like Standard Chartered and Deutsche Bank. In the private sector ICICI Bank has a mandatory leave requirement for those in sensitive positions such as treasury. However, this does not cover relationship managers. But with RBI describing the position of a relationship managers dealing with rich customers as sensitive, banks will have to add them to the list of employees required to go on mandatory leave. "We already have a mandatory leave policy for those in sensitive positions such as treasury and forex. But in the context of present developments there may be need for review" said MD Mallya, chairman, Indian Banks Association and chairman of public sector Bank of Baroda. He added that every bank would frame its own policy and there was unlikely to be an industry level approach to the issue. An Axis Bank source said that the bank did not have any mandatory leave policy but was in the process of implementing a scheme across the board. Old private banks, too, do not have such a policy. Public sector banks which account for majority of banking in the country do not have a mandatory leave policy but all banks do have a staff rotation policy. In a circular to all banks, RBI has said that it has recently conducted forensic scrutiny in banks with large-value frauds. The largest banking fraud in recent months was the one at Citibank's Gurgaon branch where Shivraj Puri, a relationship manager, defrauded high networth customers of crores by promising high returns in a non-existent scheme provided by the bank.RBI has said that based on the findings, it has done a further scrutiny of the policies and operating framework. "Banks should immediately put in place "staff rotation" policy and policy for "mandatory leave" for staff. The internal auditors as also the concurrent auditors must be specifically required to examine the implementation of these policies and point out instances of breaches irrespective of apparent justifications for non-compliance," RBI has said in its circular highlighting disincentives and controls to be introduced in a bank's human resources policy. The mandatory leave policy will also reduce the wage costs of banks. Many institutions allow employees to accumulate leave and encash them while in service or at the time of superannuation. The mandatory leave requirement will reduce the capacity for employees to accumulate leave and, therefore, require banks to make lesser provision for privilege leave.
TOI
