The Hindu Business Line : RBI directive to FIs on risk exposure

FINANCIAL institutions, which do not accept public deposit, having asset size of Rs 500 crore and above will be subject to limited off-site supervision by the Reserve Bank of India from March 31.

The RBI, in another notification, has also directed all FIs to disclose their exposures to risk and their strategy towards managing it.

Regarding off-site supervision, RBI said the existing system of off-site supervision will be replaced with a simplified information system known as the "Quarterly return on important financial parameters in respect of select Financial Institutions."

The return, certified by the FI's Chief Executive Officer and the Statutory Auditor, should be submitted to RBI within one month from the end of the quarter to which it relates. With the limited off-site supervision system in place, RBI will no longer undertake the Annual Financial Inspection.

The risk disclosures should include exposure to risks in derivatives, risk management systems, objectives and policies.

FIs should discuss their risk management policies to the extent to which derivatives are used, the associated risks and business purposes served.

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