RBI reviewing regulation of banks non-core business

The Reserve Bank of India is planning to tweak its regulatory framework governing non-banking business, including insurance and asset management, undertaken by banks and their group entities, a source familiar with the development told FE.

The idea is to remove regulatory arbitrage, if any, in the present system, they said.

The banking regulation act may be amended to include the changes.

An internal panel, set up by the central bank for this purpose, has recommended a clearer and more explicit segregation of core and non-core businesses of banks and the group entities, the sources said.

“The banking regulation department (of the RBI) has conveyed to banks its decision to reviewing the framework, and asked them to submit their inputs,” one of the sources said.

Subsequently, senior executives of key banks whose group entities are engaged in non-banking businesses, including State Bank of India, Punjab National Bank, HDFC Bank, ICICI Bank, Axis Bank, Bank of Baroda and Canara Bank, held a meeting last month to deliberate on the issue. The banks are expected to submit their views through the Indian Banks’ Association after internal discussions.