RBI to partially relax restrictions on SBM Bank India

The Reserve Bank of India (RBI) said on Tuesday it had decided to partially relax the restrictions on SBM Bank (India) until March 15, by allowing ATM and point-of-sale transactions on internationally active debit cards issued by the bank.

Last week, the RBI ordered SBM Bank to stop all transactions under the liberalised remittance scheme (LRS) – which allows Indian residents to send up to $250,000 abroad each financial year – until further notice, citing “material supervisory concerns” but without giving any further details.

SBM Bank was engaging with the RBI to address “supervisory concerns”, the lender said a few days later in an email to a customer that was reviewed by Reuters.

“The bank has since initiated corrective actions and made a submission for relaxation of the restrictions,” the RBI said in a statement. The central bank said the relaxation under LRS was based on SBM’s submission and also to provide relief to affected customers.

SBM Bank India is a unit of the State Bank of Mauritius and became the first foreign bank to receive a universal banking licence under an Indian scheme for wholly owned subsidiaries, which allowed foreign lenders to compete with Indian banks.