Banks should move wealth management services to subsidiary: RBI panel

MUMBAI Sat Jun 29, 2013 2:29am IST

A man makes a phone call while standing near a Reserve Bank of India (RBI) crest at the RBI headquarters in Mumbai January 29, 2013. REUTERS/Vivek Prakash/Files

A man makes a phone call while standing near a Reserve Bank of India (RBI) crest at the RBI headquarters in Mumbai January 29, 2013.

Credit: Reuters/Vivek Prakash/Files

Related Topics

MUMBAI (Reuters) - Indian banks should split wealth management and investment advisory services to avoid conflict of interest as well as address mis-selling of financial products, by creating a subsidiary, a draft report by a Reserve Bank of India (RBI) panel said.

The banks will need to get the RBI's approval to create subsidiaries, which would be then registered with the Securities and Exchange Board of India (SEBI), the panel proposed on Friday.

"To address the issue of conflict of interest arising from the single entity conducting both the activities of advisory/fund management as well as marketing, it is proposed to segregate the two functions," the report said, adding the bank should have an 'arm's length' relationship with its subsidiary.

The report also proposed the RBI should continue to supervise the bank's activities done through the subsidiary.

Last month, the RBI said it would issue draft guidelines to address mis-selling of financial products and structure of transactions to aid tax evasion and fradulent transfer of funds.

(Reporting by Neha Dasgupta; editing by Ron Askew)

FILED UNDER:

Reuters Showcase

GDP Growth

GDP Growth

India revises up 2013/14 GDP growth to 6.9 percent.  Full Article 

Pharma Deal

Pharma Deal

Sun Pharmaceutical wins U.S. approval to buy Ranbaxy  Full Article 

Adani Restructuring

Adani Restructuring

Adani hives off power, ports businesses to boost growth.  Full Article 

Bank of Baroda

Bank of Baroda

Q3 net profit down 69 pct on higher provisions  Full Article 

Trading Fees

Trading Fees

BSE slashes fees in FX derivatives battle with NSE  Full Article 

SpiceJet Turnaround

SpiceJet Turnaround

SpiceJet board approves up to $243 mln share sale plan  Full Article 

Currency Market

Currency Market

RBI urges companies to hedge FX exposure  Full Article 

Banking Sector

Banking Sector

Banks say no room to cut lending rates, thwarting RBI easing  Full Article 

Reuters Poll

Reuters Poll

RBI seen holding rates steady on Tuesday, minority of analysts expect cut  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage