Banks' Overseas Branches Seek Time

Banks having branches abroad have asked the Reserve Bank of India to extend the deadline of implementing the new set of reporting norms from March 2000 to June 2000.

The chiefs of these branches met the RBI authorities on Wednesday to discuss the working group's report on their overseas branches.

The working group constituted by RBI has suggested the need to enhance transparency in quarterly statements submitted by the branches to their head offices and has stressed on strengthening the on-site and off-site supervision.

The group has also suggested a separate investment and lending policy for each foreign branch to be formulated by the head office, and has recommended that each bank formulate a country-wise policy in order to reduce the branch's dependence on the head office.

The report has observed that the existing quarterly reports have a format of over 10 years vintage and has called for more details in the statements. The group has suggested that additional data regarding interest-rate risk-control, profitability, average costs of funds, interest spread, profitability per employee, yield on assets, etc., should be provided to the head office and the RBI. The revised statement should contain reconciliation of entries in respect of inter-branch business.

The RBI was of the view that the new norms should be implemented by March-end 2000. Senior officials who attended the meeting said that the draft report was accepted more or less in toto with minor modifications. "However, for banks with a large network aboard, if would take time to implement it by March 2000 and thus an extension was sought from the RBI," said sources.