RBI Imposes Restrictions On Intra-Group Investment By Banks
Banks should ensure they have systems and controls in place to identify, monitor, manage and review exposures arising from intra-group transactions, it said.
The RBI may require banks to put in place additional internal controls and a more robust risk monitoring, managing, reporting and review mechanism on intra-group transactions and exposures, it said.
According to the guidelines, banks must also ensure that transactions in low-quality assets with group entities, whether regulated or unregulated, are not done for the purpose of hiding losses or window dressing of balance sheets.
If the intra-group exposure, either at the single entity level or at the aggregate level, exceeds prudential limits, it should be reported at the earliest in the prescribed returns along with the reasons for the breach, it said.
In such situations, banks cannot undertake any further intra-group exposure (at the entity or aggregate level, as the case may be) until it is brought down to within the limit, it added.
Read More:
