Date: 2021-12-08Category: Not ApplicableState: Union GovernmentCountry: India
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
**Summary:**
This Reserve Bank of India (RBI) circular (DOR.CAP.REC.No.7221/06.20.012/2021-22) dated December 08, 2021, provides general permission to banks incorporated in India for capital infusion, profit retention, repatriation, and transfer related to their overseas branches and subsidiaries.
The circular states that banks meeting regulatory capital requirements, including capital buffers (Capital Conservation Buffer (CCB), Domestic Systemically Important Bank (DSIB) capital requirements, and Countercyclical Capital Buffer), no longer require prior RBI approval for these activities. Instead, board approval within the bank is sufficient, contingent upon a thorough analysis of business plans, regulatory requirements in both home and host countries, and the performance of the overseas centers. Compliance with all applicable home and host country laws and regulations remains mandatory.
Banks not meeting the minimum regulatory capital requirements as specified must continue to seek prior RBI approval.
All instances of capital infusion, profit retention, transfer, or repatriation must be reported within 30 days to the Chief General Manager-in-Charge, Department of Regulation, Central Office, Mumbai, with a copy to the Chief General Manager-in-Charge, Department of Supervision, Central Office, Mumbai. For profit retention, reporting is required within 30 days of finalizing the annual financial statements of the overseas branch/subsidiary.
This circular applies to all Scheduled Commercial Banks other than foreign banks, Small Finance Banks, Payment Banks, and Regional Rural Banks, and is effective from December 8, 2021.
The Department of Regulation, Central Office can be contacted at: Reserve Bank of India, 12th and 13th Floor, Central Office Building, Shahid Bhagat Singh Marg, Fort, Mumbai – 400 001. Tel: 022-2260 1000, Fax: 022-2270 5691, email: cgmicdor@rbi.org.in.
Key Entities Referenced
Reserve Bank of India: The central bank of India, the primary regulator mentioned in the document.
RBI: Abbreviation for Reserve Bank of India
Overseas Branches and Subsidiaries: The foreign branches and subsidiaries of Indian banks that are the subject of the capital infusion and profit repatriation policy.
Capital Conservation Buffer: A capital buffer requirement for banks, including Domestic Systemically Important Bank capital requirements.
DSIB: Domestic Systemically Important Bank, referred to in the context of capital buffer requirements.
CounterCyclical Capital Buffer: A capital buffer that may be mandated for banks.
Scheduled Commercial Banks: The type of banks to which this circular is applicable (excluding foreign banks, Small Finance Banks, Payment Banks and Regional Rural Banks).
Mumbai, Maharashtra: Location of the Central Office of the Department of Regulation and Department of Supervision, where reporting is to be done.
भारतीय �रज़व� ब�क
_________________________RESERVE BANK OF INDIA ______________________
www.rbi.org.in
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
a) infusion of capital in their overseas branches and subsidiaries.
b) 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.
1 Capital Conservation Buffer (CCB), including Domestic – Systemically Important Bank (D-SIB) capital
requirements where applicable, and Counter-Cyclical Capital Buffer as may be mandated.
िविनयमन िवभाग,क��ीय कायार्लय, 12 व� और 13 व� मंिजल, क��ीय कायार्लय भवन, शहीद भगत �संह मागर्,फोटर्,मुंबई-400001
दरू भाष: 022-22601000 फैक्स: 022-22705691 ई-मेल: cgmicdor@rbi.org.in
_____________________________________________________________________________________________________________________________________
Department of Regulation, Central Office, 12th and 13th Floor, Central Office Building, Shahid Bhagat Singh Marg, Fort, Mumbai- 400 001
Tel: 022- 2260 1000 Fax: 022-2270 5691 email: cgmicdor@rbi.org.in
�हदं ी आसान ह ै इसका �योग बढ़ाइए5. 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
retention2/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
2 In case of retention of profits in overseas branch/ subsidiary, the reporting shall be done within 30 days of
the finalisation of the annual financial statements of the overseas branch/ subsidiary.
2