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Informist, Friday, Oct. 4, 2024

 

NEW DELHI – The Reserve Bank of India Friday proposed changes to its guidelines on financial services that banks can provide, saying that banks must seek the regulator's approval before starting any new activity--other than those already allowed by it--through a group entity. The central bank also said group entities cannot be used to bypass guidelines that apply to the parent bank or other group entities and engage in business activities that are not otherwise allowed.

 

"The Reserve Bank has reviewed these regulations with an objective to ring-fence the banks' core business from other risk-bearing non-core businesses as well as to provide operational freedom to banks for making investments in financial services/non-financial services companies and Alternative Investment Funds," the central bank said.

 

Comments on the proposed changes must be sent to the central bank by Nov. 20.

 

Another change proposed by the RBI is to bar banks from sponsoring more than one asset reconstruction company at any point in time, with a cap of 20% on the total shareholding in the asset reconstruction company. While some of the changes will come into effect once the final guidelines are released, a few will be effective only two years from the date of the final circular.  End

 

Reported by Siddharth Upasani

Edited by Deepshikha Bhardwaj

 

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