Foreign branches/subsidiaries of Indian banks can deal in financial products not permitted in the domestic market: RBI

Circular No. RBI/2022-23/145 DOR.MRG.REC.87/00-00-020/2022-23, Dated 01.12.2022

Earlier, the RBI had issued instructions to Indian banks and All India Financial Institutions (AIFIs) on issue of dealing in financial products by their branches/subsidiaries operating outside India. On a review, the RBI felt that a framework needs to be in place to allow them to deal in financial products. Accordingly, foreign branches/subsidiaries of Indian banks/AIFIs can deal in financial products which are not permitted in the domestic market without the RBI’s approval subject to some conditions.

Further, the RBI has clarified that the financial products dealt with by the foreign branches and subsidiaries as well as IFSCs shall attract the prudential norms such as capital adequacy, exposure norms (including Large Exposure Framework), periodical valuation, and all other applicable norms. The activities of branches/subsidiaries in foreign jurisdictions and IFSCs shall be subject to the laws in India, unless specifically exempted by law.

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