RBI sends questionnaire to banks

RBI sends questionnaire to banks

Recently the wealth management and private banking business of banks have come in for a lot of flak for cases of mis-selling. The case where a relationship manger with Citibank India, Shivraj Puri, allegedly duped investors of at least Rs350 crore added fuel to the fire.

Questions have been raised on the transparency of banks in dealing with wealth management clients and demands made that the Reserve Bank of India (RBI) act against such practices by introducing checks and balances.

RBI seems to have taken note and, to start with, has recently sent a letter to scheduled commercial banks asking them to clarify on certain aspects of their private banking and wealth management business. The letter has 29 questions (see graph).

Even Securities and Exchange Board of India (Sebi) is involved in the exercise. “We are conducting a study jointly with Sebi and depending upon the responses, we will decide the future course," says Alpana Killawala, chief general manager, RBI.

Any formal guidelines on the subject will benefit you, the customer, in terms of transparent and services. With banks growing as a distribution channel for many products and large customer base, their client list is also expected to be the longest among all distributors. S. Raman, chairman and managing director, Canara Bank, said, “We have received the questionnaire from the regulator but as such most government-owned banks are not present in the space of wealth management and private banking."

The industry, however, is not too happy. “If RBI formalizes a broader framework, it will suit the interest of the mutual fund industry. But if each and every aspect of the business is regulated, it will adversely impact all stakeholders," says Rajan Krishnan, chief executive officer, Baroda Pioneer Asset Management Co. Ltd.

Also see | RBI sends questionnaire to banks ( PDF )

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Graphic By Sandeep Bhatnagar; Illustration By Jayachandran