What changed
This Master Circular updates the previous July 2007 circular by incorporating all instructions issued up to June 30, 2008. It consolidates multiple earlier circulars into a single reference document for para-banking activities.
What it means for you
Banks must ensure their para-banking activities—whether done departmentally or through subsidiaries—adhere to the updated consolidated guidelines. The circular reinforces prudential norms and safeguards for activities like insurance, mutual funds, and primary dealership. It also reminds banks of separate circulars for credit card operations.
What you must do
- Review and align all para-banking operations with the updated Master Circular.
- Ensure subsidiaries and affiliated companies comply with investment ceilings and prudential norms.
- Refer to the annexes for specific guidelines on smart/debit cards, insurance agency, and pension fund management.
- Maintain proper books and accounts for primary dealership and other regulated activities.
Who it affects
All scheduled commercial banks (excluding RRBs), Bank subsidiaries and affiliated companies engaged in para-banking, Bank departments handling leasing, hire purchase, factoring, PD, mutual funds, insurance, pension funds, underwriting, and card business
Does this circular apply to Regional Rural Banks?
No, the circular explicitly excludes RRBs from its scope.
What activities are covered under para-banking?
Activities include equipment leasing, hire purchase, factoring, primary dealership, mutual funds, insurance, pension fund management, underwriting, smart/debit cards, and money market mutual funds.
Is there a separate circular for credit card operations?
Yes, the circular mentions that a separate Master Circular has been issued on credit card operations of banks.