Central Bank permits banks to infuse capital in overseas branches without its prior approval
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- Last Updated on 13 December, 2021
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Circular no. RBI/2021-22/136, Dated, 8-12-2021
To provide greater operational flexibility, the RBI has decided that prior approval of RBI for capital infusion/ transfers including retention/ repatriation of profits, shall not be required by banks that meet the regulatory capital requirements including capital buffers. Instead, the banks shall seek the approval of their boards for the same.
RBI clarified that in addition to the above, while considering such proposals, banks shall analyze all relevant aspects including inter alia the business plans, home, and host country regulatory requirements and performance parameters of their overseas centers. Banks shall also ensure compliance with all applicable home and host country laws and regulations.
These provisions shall apply to all Scheduled Commercial Banks other than foreign banks, Small Finance Banks, Payment Banks, and Regional Rural Banks. Banks that do not meet the minimum regulatory capital requirements, shall be required to seek prior approval of RBI.
RBI directed that all the banks on which these provisions are applicable shall report all such instances of infusion of capital or retention/transfer/ repatriation of profits in overseas branches and subsidiaries within 30 days of such action, to the Chief General Manager-in-Charge.
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