Banks need prior approval for foreign currency deposit schemes

The Reserve Bank of India (RBI) has mandated banks to seek prior approval before offering any foreign currency deposit scheme to custom-ers under the liberalised remittance route.

The RBI expressed concerns over advertise-me-nts by banks on behalf of mutual funds for lack of appropriate disclosure.

“A number of foreign banks operating in India as well as Indian banks have been soliciting (through advertise-me-nts) foreign currency deposits (from residents under LRS) [on behalf of overseas mutual funds] or for placing at their overseas branches,” RBI said in its Master Direction on the liberal-ised Remittance Scheme.  

“These advertisements may not always contain appropriate disclosures to guide potential depositors giving rise to concerns from the point of view of protecting the interest of the resident individuals,” the regulator said, adding that marketing in India of schemes soliciting foreign currency deposits by foreign entities, not having operational presence in India, also raises supervisory concerns.