The RBI on Wednesday relaxed the rules on bank investment in overseas branches or subsidiaries. The apex bank also decided to float a discussion paper to review the prudential norms on their investment.

Banks incorporated in India seek the prior approval of the RBI to infuse capital in their overseas branches and subsidiaries as well as for the retention and repatriation or the transfer of profits from these centres.

“On a review, and with a view to provide operational flexibility to banks, it has been decided that banks meeting the regulatory capital requirements may, with the approval of their boards, infuse capital in their overseas branches and subsidiaries, retain profits in these centres, and repatriate/transfer profits therefrom, without prior approval of RBI, subject to post facto reporting,’’ the RBI said in its statement on development and regulatory policies.

In a separate circular, the banking regulator said that while considering such proposals, the lenders will have to analyse all relevant aspects including the business plans, home and host country regulatory requirements and performance parameters of their overseas centres.

Moreover, they will have to ensure compliance with all applicable home and host country laws and regulations.
Banks now have to maintain a minimum capital to risk weighted assets ratio of 9 per cent.