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:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Everest Tragedy

Everest Tragedy

Search ends for missing on Everest, some Sherpas call for shutdown.  Full Article 

Ukraine Crisis

Ukraine Crisis

Deadly gun attack in eastern Ukraine shakes fragile Geneva accord.  Full Article 

Hamilton Wins

Hamilton Wins

Lewis Hamilton wins Chinese GP in Mercedes one-two.  Full Article 

Monte Carlo Masters

Monte Carlo Masters

Wawrinka beats Federer to win Monte Carlo Masters.  Full Article 

Happy Easter

Happy Easter

Pope presides at Vatican Mass leading Catholics into Easter.  Full Article 

Box Office

Box Office

'Captain America' soars again, tops 'Rio 2' to win U.S. box office.  Full Article 

Bollywood

Bollywood

Movie Review: 2 States.  Full Article 

Reuters India Mobile

Reuters India Mobile

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