The Reserve Bank of India vide its notification dated 8th December 2021 has announced that no prior approval from RBI will be required for banks to infuse capital in overseas branches.
At present, banks incorporated in India can infuse capital in their overseas branches and subsidiaries, retain profits in these centres and repatriate/ transfer the profits with prior approval of the RBI.
However, 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 buffers). Instead, the banks shall seek approval of their boards for the same.
Banks which do not meet the minimum regulatory capital requirement, shall be required to seek prior approval of RBI as hitherto.
Banks shall report all such instances of infusion of capital and/ or retention/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.
This circular is applicable to all Scheduled Commercial Banks other than foreign banks, Small Finance Banks, Payment Banks and Regional Rural Banks.
