Post-scams,RBI plans wealth mgmt rules

The matter came up for discussions in the last meeting of the Sub-Committee of Financial Stability and Development Council (FSDC) held on August 16 here and chaired by RBI Governor D Subbarao.

The present regulatory guidelines permit banks offering wealth management services to give only non-discretionary or advisory services.

However,over the time there has been a “blurring of activities” between offering non-discretionary and discretionary services (like investment management),they said.

“Banks may actually be offering a greater gamut of services than is permitted under the extant guidelines,” sources said.

The RBI in consultation with Sebi had earlier circulated a questionnaire to banks offering the services.

All major banks like SBI,ICICI and Standard Chartered offer wealth management services in the country.

The RBI,Sebi and the Government began to look at ways to revise the norms for offering by banks after the alleged multi-crore fraud at Citibank’s Gurgaon branch came to light late last year,sources added.

Several depositors and high-networth individuals (HNIs) were duped in the Rs 460.91-crore fraud,allegedly engineered by a Citibank¿s Global Wealth Manager Shivraj Puri who was working at the branch of the bank.

The RBI has already imposed a Rs 25 lakh fine on the bank for not following account opening and anti-money laundering norms at the Gurgaon branch.

Wealth management services are tailor-made asset management facility provided to high network individuals (HNIs).

In FSDC meeting held in May,sources said,RBI was of the view that if such services are offered by banks,there should be effective firewalls or they should offer the services through a separate legal entity which could then be regulated by SEBI.