Inspection Department

Overview

Internal inspection mechanism is, interalia, an important and effective tool in the hands of the Management to exercise supervision and control over the functional and business performance of an organisation. 

Structure of the Inspection Department

Functions

Coverage

Audit Committee of the Board (ACB)

Risk Management Committee of the Board (RMCB)

Functions

Default Monitoring

The department is headed by a CGM who is supported by GMs, DGMs, AGM, Managers and other supporting staff.

Functions

The main function of the ID is to critically examine and appraise the performance of the ROs/SOs/TEs vis-a-vis their objectives / goals and their expected role.  The functional role of ID, however, remains dynamic in tune with the environmental changes and emerging organisational needs.  Various areas covered by the internal inspection are :

a)  Business
The inspection covers the business department like Investment Credit Department, Production Credit Department, State Project Department, etc. Apart from evaluating their business performance, various operational issues relating to these departments are also critically examined and commented upon in the Inspection Report.

b) Institutional Development
With a view to evaluating the efficacy of the various developmental strategies formulated at the corporate level and operationalised at the unit level, the aspects relating to the development of the client institutions viz. Co-operative Banks both under short term and long term and RRBs are covered in the internal inspection.

c) Developmental and Promotional
Aspects relating to Development Policy Department (Farm and Non-Farm), Micro Credit Innovations Department (MCID), development planning, monitoring and evaluation functions etc. are reviewed by the Inspection Team to garner validated feed back on the field level performance of the various promotional initiatives taken up by these Departments.

d)  Human Resource Management Department
The Inspection Team examines the need for capacity building among the staff, the utilisation of manpower, assessment of management effectiveness, the level of discipline and punctuality etc.

e) Housekeeping
The efficacy of the existing systems and the impregnability of the controls, checks and balances are reviewed during the Inspection and suggestions for more effective systems and procedures are made by the Inspection Team.

Coverage

At present there are 28 ROs and 3 TEs of NABARD,  which are subjected to internal inspection as per the periodicity decided therefor from time to time.  In addition to conducting the inspection of ROs, ID also conducts inspection of HO Departments, according to the periodicity decided therefor.

In addition to conducting inspections, the ID also monitors very closely the work of the concurrent audit undertaken by NABARD staff in the Regional Units and by the External Auditors in a few Departments of HO.

Audit Committee of the Board (ACB)

With a view to providing direction as also overseeing the operations of the total audit functions, a Sub-Committee of the Board viz. Audit Committee of the Board was constituted in June 2001. Main functions of the Audit Committee are as under : 

• ACB provides direction as also oversees the operation of the total audit functions.  Total audit function will imply the organisation, operationalisation and quality control of internal audit and inspection within the institution and follow-up on the statutory / external audit and inspections by the RBI.
• As regards internal audit, the ACB reviews the internal inspection / audit function in the institution - the system, its quality and effectiveness.  It  also focuses on the follow-up on frauds and major areas of  house-keeping.
• Regarding statutory audits, the ACB may follow-up on all the issues raised in the reports.  It may interact with the external auditors before the finalisation of the annual financial accounts and report.
• The ACB may follow-up all the issues / concerns raised in the inspection reports of the RBI.
• Any other related issue.

The Board of Directors of NABARD had approved the setting up of a separate Board level Sub-committee comprising the members of the Audit Committee and the Chairman of the Bank for guiding in the area of Risk Management in NABARD.  Accordingly, the Risk Management Committee of the Board was constituted in March 2005.  The CGM of ID is the convenor of the Committee.  The position of all perceived risks is periodically put up to the Risk Management Committee by the ID which critically evaluates the same and provides operational and policy guidance to the Bank which paves the way for an effective risk management so as to safe guard the interest of the Organisation.

Functions

• The Risk Management Committee has been assigned the task of guiding the Risk Management Policy of NABARD.  It will devise the policy and strategy for Integrated Risk Management containing various risks exposures of the Bank (credit risk, market risk and operational risk).
• The Committee oversees the functioning of the Credit Risk Management Committee, Asset Liability Management Committee and other risks committees of the Bank, if any.

Default Monitoring

In addition to the above, ID also handles the work of monitoring of defaults by the client institutions and guides in follow up action for recovery of default.