Ethics and Regulatory Compliance
Ethical standards
This domain tests integrity, confidentiality, and compliance. Bank staff must avoid conflicts of interest, not misuse customer data, refuse bribes, and disclose fraud through proper channels. Fair practices codes require transparent charges and respectful recovery practices. Whistle-blowing protects those who report wrongdoing. Ethics is tested through scenario questions, not slogans.
Regulatory framework
The RBI Act, 1934 and the Banking Regulation Act, 1949 provide the core legal framework. KYC norms require customer identification and periodic updates. The Prevention of Money Laundering Act, 2002 requires reporting of suspicious and high-value cash transactions. FEMA governs foreign exchange. Banks must file cash transaction reports for cash deposits or withdrawals above the prescribed threshold, commonly ₹10 lakh, and suspicious transaction reports without telling the customer. Data privacy and consumer protection rules also apply.
Worked example
A customer deposits ₹12 lakh cash in a day. Reasoning: the bank must complete KYC, verify the source where required, and file a cash transaction report under PMLA. The bank must not tip off the customer about the report. The transaction is not automatically illegal, but it triggers compliance duties.
Traps
Do not say KYC is one-time. Do not disclose a suspicious transaction report to the customer. Do not confuse a cash transaction report threshold with a suspicious transaction report, which has no fixed amount. Do not treat ethics as optional.