Banks may not require RBI nod for floating arms

Regulator to emphasise non-duplication of business

- MANOJIT SAHA

For commercial banks to float subsidiaries, approval from the Reserve Bank of India (RBI) may not remain mandatory, according to highly placed sources.

However, if the subsidiary is for insurance or asset management, the bank must take approval from the respective regulators.

The central bank is considering the matter.

The move, sources said, is to make banks’ doing business easier. The regulator has been streamlining regulations for the financial sector to enhance ease of doing business, and this move is a step in that direction.

Section 6 of the Banking Regulation Act specifies the businesses a bank can be in — beyond standard banking.

If banks are not required to take approval, then it would be a marked departure from current practice.