State Bank of India (SBI) is planning to set up an operations support subsidiary (OSS).
This subsidiary is expected to provide support services mainly for agriculture, micro, small and medium enterprises, other micro loans, data entry operations, activities that can be undertaken as allowed for Business Correspondents, among others.
India’s largest bank has received an in-principle approval from the Reserve Bank of India (RBI) for setting up the subsidiary.
The support services provided by OSS to the bank will be subject to RBI norms laid down vide ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’ and ‘Master Direction on Financial Services provided by Banks’.
Hiring consultant
The bank has initiated the process of hiring a consultant who will study similar subsidiaries set up by other Indian banks and suggest adoption of best practices suitable to the bank in alignment with extant RBI guidelines/regulations
Besides suggesting integration strategy of OSS with the Bank and the process to be followed for achieving optimum results, the consultant will also recommend the future scope of expansion of activities for the OSS.
The consultant will also enumerate the permissible activities of the subsidiary consistent with the extant legal and regulatory framework.