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Brief Overview
Notification on “Operations of subsidiaries and branches of Indian banks and All India Financial Institutions (AIFIs) in foreign jurisdictions and in International Financial Services Centers (IFSCs) - Compliance with statutory/regulatory norms” as published by the Reserve Bank of India (“RBI”), dated 1st December 2022 (“Notification”), revising the norms and conditions applicable to foreign subsidiaries and branches including International Financial Services Centres (“IFSCs”) of Indian banks and All India Financial Institutions (“AIFIs”) (collectively referred to as “Foreign Subsidiaries/Branches”) for dealing in financial products, including structured financial products.
Technical Details:
Some of the key highlights of the Notification are:
1) No RBI approval required for dealing in financial products by Foreign Subsidiaries/Branches and IFSCs [including Gujarat International Finance Tec-City (“GIFT City”)], which are not permitted by RBI in the domestic market subject to compliance with below conditions.
Compliance of the conditions by Foreign Subsidiaries/Branches shall be ensured by parent Indian bank/AIFIs:
(a) prior approval from the Board is necessary and, if required, appropriate authority in the concerned jurisdictions;
(b) they have adequate knowledge, understanding, and risk management capability for handling such products;
(c) they act as market makers for products only if they have the ability to price/value such products;
(d) their exposure and mark-to-market (MTM) on these products are appropriately captured and reported in the returns furnished to the RBI;
(e) they do not deal in products linked to Indian Rupee unless specifically permitted by RBI;
(f) they do not accept structured deposits from any Indian resident;
(g) they adhere to the suitability and appropriateness policies as mandated by the RBI and the host regulators, as applicable; and
(h) they adhere to prudential norms.
2) It has been also clarified that a Parent bank of Foreign Subsidiaries/Branches shall adhere to more stringent prudential norms among the host and home regulations relating to financial products.
3) The activities of Foreign Subsidiaries/Branches and IFSCs shall be subject to the laws in India, unless specifically exempted by law.
For further details, please see:
For any queries / clarifications, please feel free to ping us and we will be happy to chat:
● Mr. Ankit Sinha (ankit.sinha@jclex.com)
● Mr. Saurabh Sharma (saurabh.sharma@jclex.com)
● Ms. Rupul Jhanjee (rupul.jhanjee@jclex.com)