be subject to less frequent but regular assessments. good quality internal audit reports can provide valuable insights mitigating current risks and anticipating areas of potential risks by evaluating the risk management systems and control procedures prevailing in various areas of a bank's operations. it can also play an important role in preventing and detecting frauds. role of rbi onsite examinations by rbi are not intended to be fault finding missions and instead to provide an insight into the overall health of the bank. they often pick up issues missed by the internal assurance functions and external audit. we would also like you to give due attention to the risk assessment report ( rar ) observations and risk mitigation plans ( rmp ) issued by the rbi. to ensure sustained compliance, it is important to address the root cause of the observations. further, there should be no compromise on the agreed timelines for rmps, and the bank should ensure that all rmp items and rar observations are comprehensively addressed well before the start of the next 3 / 4 bis - central bankers'speeches inspection cycle. pending compliance paragraphs is not a desirable situation and may be a reflection of the lack of due attention by the management as well as the board. such instances can also invite stern supervisory action. conclusion one of the most important facets of effective assurance functions is independence. there are regulations already in place that provide for adequate stature, direct lines of reporting and preventing of dual hatting of assurance functionaries. i would urge you to ensure that these regulations are complied with and that you are not engaged in any role which compromises your independence. overall, i believe assurance functions, if they work effectively, can create an environment in the bank where adherence to laws, regulations, ethical standards, and internal policies is paramount, and where everyone is committed to doing the right thing. effective assurance functions are indispensable in promoting trust, integrity, and compliance within the banking sector. by working collaboratively and proactively, we can navigate the challenges ahead and ensure the long - term success of our institutions. i once again extend my sincere regards to all present and wish that going ahead in future we collectively embark on a journey of financial resilience drawing from the key ideas discussed here. i also look forward to listening from you. 4 / 4 bis - central bankers'speeches

##udent liquidity management. concentration risk whether it be in advances or in funding sources is something that we should be mindful of. large exposures to a single counterparty or a group of counterparties turning bad can have detrimental consequences. therefore, the frenzy of some of the ucbs to acquire large corporate exposures which are beyond their bite size, is to be strictly avoided and there is a need to closely monitor the existing ones. it is essential to ensure that there are well documented board approved policies for important aspects such as identification of target segments and business sectors, acceptable concentration levels, product specific guidelines such as borrower loan eligibility criteria, etc. risk managers should try to see that these policies are in 2 / 4 bis - central bankers'speeches alignment with the risk that the bank can bear i. e. its risk tolerance. for instance, a lossmaking bank with high npas should not be giving high risk loans and instead be focussing on recovery efforts. the other aspect i would like to highlight is the meticulous monitoring of risk limits. frequent breaches in risk limits, coupled with their non - ratification or their routine ratification, poses substantial dangers to the stability and integrity of financial institutions that extend beyond the immediate financial implications. if breaches become normalized or overlooked, employees may perceive risk limits as mere guidelines rather than non - negotiable boundaries, thereby compromising the institution's overall risk awareness. therefore, it is imperative to address breaches systematically, conduct thorough investigations, hold staff accountable, and implement corrective measures to fortify the risk management practices. compliance next in line is the role of compliance. compliance should adopt a forward - looking approach to anticipate and prevent non - compliant activities. rather than reacting to issues after they arise, compliance should strive to identify and address potential compliance risks before they escalate. the compliance function should adopt a'regulation - plus'approach, going beyond mere adherence to the letter of regulatory requirements and instead ensure that the spirit and intent of the regulation is also addressed. internal audit once appropriate policies and strong internal controls are in place, it is for internal audit to independently verify compliance with the same. very often we come across deficiencies in the scoping, coverage, and periodicity as well as issues in independence of the internal audit function. proper scoping should ensure that risks are comprehensively covered. further, high - risk areas may necessitate more frequent audits, while lower - risk areas may