Set up subsidiary for investment advisory biz: RBI to banks
22/04/2016 01:18
The Reserve Bank asked banks offering investment advisory services (IAS) through a separate subsidiary to avoid any conflict of interest, said the PTI report. "IAS is defined and regulated by SEBI under the SEBI (Investment Advisors) Regulations, 2013, and entities offering these activities need to be registered with SEBI. In view of the same it is advised that henceforth, banks cannot undertake IAS departmentally," RBI said in a notification. "Accordingly banks desirous of offering these services may do so either through a separate subsidiary set up for the purpose or one of the existing subsidiaries after ensuring that there is an arm's length relationship between the bank and the subsidiary," it added. The notification said that the sponsor bank should obtain specific prior approval of Department of Banking Regulation before offering IAS through an existing subsidiary or for setting up a subsidiary for this purpose, he said. These subsidiaries offering IAS will be registered and regulated by Sebi. It further said that IAS provided by the bank sponsored subsidiaries should only be for the products and services in which banks are permitted to deal in as per Banking Regulation Act. Banks which are presently offering these services may reorganise their operations in accordance with these guidelines within a period of three years from the date of issue of this circular, it added.
22/04/2016 01:18
