- Mutual Fund Business
- Smart / Debit Card Business
- Banks into Insurance Business
- Pension Funds Management (PFM) By Banks
- Safety Net Schemes
- Referral Services
Mutual Fund Business
- Previous approval of the run batted in ought to be obtained by banks before enterprise investment trust business. Bank-sponsored mutual funds ought to adjust to tips issued by SEBI from time to time.
- The bank-sponsored mutual funds mustn’t use the name of the sponsoring bank as a part of their name.
- Banks could enter into agreements with investment trusts for promoting the mutual fund units subject to the subsequent terms and conditions:
- Banks ought to solely act as associate degree agents of the purchasers, forwarding the investors’ applications for purchase/sale of radio frequency units to the Mutual Funds/ the Registrars / the transfer agents.
- Banks mustn’t acquire units of Mutual Funds from the secondary market.
- Banks mustn’t buy units of Mutual Funds from their customers.
- If a bank proposes to increase any credit facility to people against the protection of units of Mutual Funds, sanction of such facility ought to be in accordance with the living directions of run batted in on advances against shares/debentures and units of mutual funds.
- Banks holding custody of radiofrequency units on behalf of their customers, ought to make sure that their own investments and investments created by / happiness to their customers are unbroken distinct from one another.
- Banks ought to place in situ adequate and effective management mechanisms during this regard. Besides, with a read to making sure higher management, marketing of units of mutual funds could also be confined to bound choose branches of a bank.
Smart / Debit Card Business
Banks could introduce smart/online debit cards with the approval of their Boards, keeping see able the rules by RBI batted in.
- Banks with networth of Rs.100 large integer and on top of that ought to undertake the issue of off-line debit cards.
- Banks cannot provide smart/debit cards in tie-up with alternative non-bank entities.
- Banks ought to review operations of smart/debit cards and place up review notes to their Boards at half-yearly intervals.
- In the case of debit cards, wherever authorization and settlement are off-line or wherever either authorization or settlement is off-line, banks ought to acquire previous approval of the banking concern of Asian nation for the introduction of constant by submitting the small print on the mode of authorization and settlement, authentication methodology utilized, the technology used, tie-ups with alternative agencies/service suppliers (if any), at the side of Board note/Resolution.
- A report on the operations of smart/debit cards is forwarded to the Department of Payment and Settlement Systems (DPSS) with a duplicate to the involved Regional workplace of the Department of Banking supervising on half yearly basis.
Banks into Insurance Business
Here, should submit necessary applications to run batted in furnishing full details in respect of the parameters as laid out in the small print of equity contribution projected within the joint venture/strategic investment, the name of the corporate with whom the bank would have tie-up arrangements in any manner in the insurance business, etc. The relative Board note and backbone passed on that approving the bank’s proposal at the side of viability report ready during this regard can also be forwarded to order Bank.
Pension Funds Management (PFM) By Banks
This would be subject to their satisfying the eligibility criteria prescribed by PFRDA for Pension Fund Managers. PFM mustn’t be undertaken departmentally. They must acquire previous approval from RBI in such business. The relative Board Note and backbone passed on that approving the bank’s proposal at the side of an in-depth viability report ready during this regard can also be forwarded to order Bank.
Safety Net Schemes
Reserve Bank had discovered that some banks/their subsidiaries were providing buy-back facilities beneath the name of ‘Safety Net’ Schemes in respect of bound public problems as a part of their businessperson banking activities. Beneath such schemes, massive exposures are assumed by the method of commitments to shop for the relative securities from the first investors at any time throughout a stipulated amount at a value determined at the time of issue, no matter the prevailing value. Banks/their subsidiaries have so been suggested that they must refrain from giving such ‘Safety Net’ facilities by no matter name known as.
There is no objection to banks giving referral services to their customers for the monetary products subject to the subsequent conditions. The bank/third party issuers of the monetary product ought to strictly adhere to the KYC/AML tips in respect of the customer who are being named the third party issuers of the product.
- The bank ought to make sure that the choice of third-party issuers of the monetary product is completed in such a way thus on the lookout of the reputational risks to that the bank could also be exposed in managing the third party issuers of the product.
- The bank ought to create it expressly clear direct to the client that it’s strictly a referral service and strictly on a non-risk participation basis.
- The third party issuers ought to adhere to the relevant regulative tips applicable to them.
- While giving referral services, the bank ought to strictly adhere to the relevant run batted in tips.