General permission for infusion of capital in overseas branches and subsidiaries and retention/ repatriation/ transfer of profits in these centres by banks incorporated in India

Last updated: 09 December 2021

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The Reserve Bank of India (RBI) has granted general permission for Indian banks to infuse capital into their overseas branches and subsidiaries. Banks that meet regulatory capital requirements no longer need prior RBI approval for capital infusion, retention, repatriation, or transfer of profits. Instead, they must obtain approval from their respective boards and report such actions to the RBI within 30 days. This change aims to provide greater operational flexibility.

RBI/2021-22/136
DOR.CAP.REC.No.72/21.06.201/2021-22

December 08, 2021

Dear Sir/ Madam,

General permission for infusion of capital in overseas branches and subsidiaries and retention/ repatriation/ transfer of profits in these centres by banks incorporated in India

Please refer to para 1 of the ‘Statement on Developmental and Regulatory Policies’ dated December 8, 2021 on the above subject.

2. As per extant practice, banks incorporated in India seek prior RBI approval for

infusion of capital in their overseas branches and subsidiaries.
retention of profits in, and transfer or repatriation of profits from these overseas centres.

3. In order to provide greater operational flexibility, it has been decided that prior RBI approval for above capital infusion/ transfers (including retention/ repatriation of profits), shall not be required by banks which meet the regulatory capital requirements (including capital buffers¹). Instead, the banks shall seek approval of their boards for the same.

4. While considering such proposals, banks shall analyse all relevant aspects including inter alia the business plans, home and host country regulatory requirements and performance parameters of their overseas centres. Banks shall also ensure compliance with all applicable home and host country laws and regulations.

5. Banks which do not meet the minimum regulatory capital requirements as laid down in para 3 above, shall be required to seek prior approval of RBI as hitherto.

Reporting

6. Banks shall report all such instances of infusion of capital and/ or retention/transfer/ repatriation of profits in overseas branches and subsidiaries within 30 days of such action, to the Chief General Manager-in-Charge, Department of Regulation, Central Office, Mumbai with a copy to Chief General Manager-in-Charge, Department of Supervision, Central Office, Mumbai.

Applicability

7. This circular is applicable to all Scheduled Commercial Banks other than foreign banks, Small Finance Banks, Payment Banks and Regional Rural Banks.

These instructions come into effect from the date of the circular.

Yours faithfully,

(Usha Janakiraman)
Chief General Manager

FAQ :

Indian banks that meet regulatory capital requirements can now infuse capital into their overseas branches and subsidiaries, and manage profits (retention, repatriation, transfer) without needing prior approval from the RBI. Board approval is now sufficient for these actions.

No, only banks that do not meet the minimum regulatory capital requirements will still need to seek prior approval from the RBI. Banks meeting these requirements have been granted general permission.

The general permission covers the infusion of capital in overseas branches and subsidiaries, as well as the retention, repatriation, and transfer of profits in these overseas centres.

Banks must ensure they meet regulatory capital requirements, obtain board approval for overseas capital infusion and profit management, and comply with all applicable home and host country laws and regulations. They also need to report these actions to the RBI within 30 days.

This circular is applicable to all Scheduled Commercial Banks other than foreign banks, Small Finance Banks, Payment Banks, and Regional Rural Banks.

Guest

Notification No : RBI/2021-22/136 DOR.CAP.REC.No.72/21.06.201/2021-22
Published in Community & General
Source : https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12205&Mode=0

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