The Hindu Business Line : Investments abroad: RBI steps in as watchdog

ALL banks, Indian and foreign, including those not having an operational presence in India should henceforth seek approval from the Reserve Bank of India before marketing domestically to resident Indians foreign currency deposit schemes, or overseas mutual funds, any other such foreign financial services.

In February, the RBI announced a liberalised remittance scheme, permitting resident individuals to make remittances for an amount not exceeding $25,000 per calendar year, for any current or capital account transactions.

In a circular to all authorised dealers in foreign exchange, the apex bank has observed that, several advertisements by both foreign banks and Indian banks, soliciting foreign currency funds and deposits do not contain appropriate disclosures to guide potential depositors

In the case of banks operating in India concerns arise regarding adequate disclosures from the point of view of protecting the interest of the resident individuals. Further, marketing in India of schemes soliciting foreign currency deposits by foreign entities, not having operational presence in India, also raises supervisory concerns, according to RBI.

"It has therefore been decided in public interest, that all banksshould seek prior approval from RBI for such schemes', it said.

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