The move is aimed at aligning certain sections of the Banking Regulation Act with the norms set by the banking regulator, Reserve Bank of India.
The provisions that are being examined as part of the proposed amendment include rules that restrict new bank license holders to carry out specific business activities from both a separate entity and the bank itself.
Currently, under section 19 Under the BR Act, a banking company can form any subsidiary company for carrying on the business permitted for a banking company. A government official aware of the developments said, “We have received representations from various stakeholders, it is being probed but no decision has been taken.” banks It is permissible to conduct such business both through subsidiaries and internally including foreign lenders.
In 2016, reserve Bank of India had issued “Guidelines for ‘On Tap’ Licensing of Universal Banks in the Private Sector”, under which it was prescribed that a Non-Operating Financial Holding Company or a non-operating financial holding company or through a separate entity after prior approval from RBI Special activities can be conducted from But, it has to be ensured that similar activities are not conducted through the bank.
In their representations, some stakeholders argued that the guidelines and provisions of RBI under the Banking Regulation Act are not together. RBI’s Internal Working Group had also recommended that until the NOFHC structure becomes viable and operational, concerns with respect to banks carrying out various activities through subsidiaries or associates need to be addressed through appropriate regulations. the wanted.