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RBI warns banks of risks in managing pvt pool of capital

RBI warns banks of risks in managing pvt pool of capital
PTI
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First Published: Wed, Apr 22 2009. 04 46 PM IST
Updated: Wed, Apr 22 2009. 04 46 PM IST
Mumbai: The Reserve Bank has cautioned banks against risks associated with sponsoring and managing private pools of capital like private equity funds, venture capital funds and infrastructure funds.
The central bank will come out with a draft paper in this regard, eliciting public comments, after which final guidelines will be issued by 30 September this year.
In the annual credit policy, the Reserve Bank said: “There is need for banks to have greater awareness of the risks inherent in such activities (sponsoring and managing of private pools of capital) and limit such exposures commensurate with their riks management and available capital.”
The RBI said it has been observed that Indian banks have recently been engaged in sponsoring and managing private pools of capital such as venture capital funds and infrastructure funds.
Keeping in view the supposed risks involved in such activities, the RBI has mandated maintaining a certain level of capital against those.
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First Published: Wed, Apr 22 2009. 04 46 PM IST
More Topics: RBI | Capital | Banks | Risks | Infrastructure funds |