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December 16, 1998 |
RBI will penalise banks that are not Y2K compliantThe Reserve Bank of India will take penal action against banks under the RBI Act if they fail to upgrade their computers to overcome the date 2000 problem.The penalty will apply to banks that don't become Y2K compliant by March 1999.
Industry reports show that over 70 per cent of the commercial banks and their subsidiaries are expected to become Y2K compliant this month itself. RBI has also asked banks to hold discussions with corporate clients and enforce Y2K compliance on them by limiting exposure to such organisations. Besides its own inspection and supervisory mechanism on banks, the RBI is also negotiating with the Institute of Chartered Accountants and auditors about the possibility of putting a clause in their quarterly report on banks about the progress made towards Y2K compliance. Mittal says that all the mainframe computers at four clearing centres - Bombay, Delhi, Calcutta and Madras - will be made Y2K compliant by July 1999. It has set up a high-level committee under its Deputy Governor S P Talwar to monitor bimonthly, the progress made by the RBI, banks and financial institutions and NBFCS. Besides three executive directors of RBI, the other members of the committee include officials from banks, IBA, NIBM and ministries of finance and communications. Meanwhile, the RBI has printed a booklet on 'Year 2000 preparations in the banking and financial sector'. The publication brings out clearly the broad approach adopted by banks and financial institutions in tackling the problem. The RBI also initiated a process for creation of Y2K awareness in banks and financial institutions in September 1996. A detailed circular was issued then, advising the banks to prepare an inventory of the hardware, operating system software and application software that they possess and do the scoping and diagnostics to assess whether their systems are Y2K compliant or not. This was followed by making available to banks and financial institutions, material on the subject received from a number of international sources. Presentations were organised by the Indian Banks' Association and the Reserve Bank of India through the National Institute for Bank Management, Tata Consultancy Services, Tata Infotech, Standard Chartered Bank, ANZ Grindlays, Citibank and State Bank of India. Test kits were made available to the banks and financial institutions so that they could test all computers. They were also advised to repair, replace or abandon machines depending on the test results by Y2K version of the machines. The major MICR cheque-processing systems at the four metropolitan centres operated by the Reserve Bank of India are not Y2K complaint and will be replaced soon. UNI |
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