On-site examination is an important duty of supervisors, and, together with market entry and off-site surveillance, constitute three major tools of banking supervision. In recent years, the businesses of banking institutions have become more complicated, entailing stricter requirements for on-site examination.
First, positioning on-site examination clearly. The Measures identifies on-site examination as an important component of regulatory process, and, based on the positioning, divides duties among different departments. It stresses that, on one hand, inspection departments shall play a leading role to ensure the independence and authority of on-site examination, and, on the other hand, the mechanism of information sharing among relevant departments and different levels shall be established so as to form regulatory synergy.
Second, ensuring all-around support for on-site examination. Resources should be provided to support on-site examination in terms of personnel, financial resources and the management system. Besides, the examined institutions should cooperate with the inspectors and provide necessary working conditions and supportive facilities for on-site examination.
Third, categorizing on-site examinations. Based on their different contents and processes, on-site examinations are categorized into comprehensive examination, thematic examination, follow-up examination, temporary examination and auditing examination.
Fourth, standardizing project set-up procedures. The Measures specifies the duties and procedures to set up projects and sets down the principle of “no on-site examination without the approval procedures for project set-up”, to avoid randomness and highlight the seriousness, rationality and fairness of inspection.
Fifth, diversifying the approaches of inspection. Based on the real conditions of on-site examinations, the Measures standardizes some approaches and adds new ones. The key points include: strengthening the utilization of the inspection analysis system, making full use of internal and external auditing departments of examined institutions, standardizing the process of cooperative inspection and detailing relevant process of investigative right.
Six, highlighting the disposal of identified problems. The Measures sets down requirements for the disposal of identified problems and the application of inspection results, i.e., adopting problem-specific solutions, establishing the mechanism of information feedback and sharing, relating the current inspection with the result of previous inspections and the arrangements of future inspections, etc.
The issuance of the Measures will further improve on-site examination as a tool of law enforcement, impose harsher punishment on illegal activities, so as to better identify and guard against the risks in banking institutions and enhance the effectiveness and authority of supervision.
Re-disseminated by The Asian Banker