What changed
This master circular updates the previous July 2011 version by incorporating all instructions issued up to June 30, 2012. It consolidates multiple earlier circulars into one document for easier reference.
What it means for you
Banks now have a single, updated reference for all para-banking activities, reducing compliance ambiguity. The circular reinforces RBI's expectation that these activities be conducted prudently, with adequate safeguards, especially in subsidiaries and fee-based services.
What you must do
- Review the updated master circular and ensure all para-banking activities comply with the latest instructions.
- Verify that any subsidiaries or affiliates engaged in para-banking adhere to investment ceilings and relationship norms.
- Update internal policies and training materials to reflect the consolidated guidelines.
- Ensure disclosure of commissions and remunerations from referral services and other para-banking activities.
Who it affects
All scheduled commercial banks (excluding RRBs), Bank subsidiaries and affiliates engaged in para-banking, Compliance and risk management teams, Departments handling insurance, mutual funds, smart cards, and pension fund management
Does this master circular apply to Regional Rural Banks (RRBs)?
No, the circular explicitly excludes RRBs from its scope.
What key para-banking activities are covered?
Activities include subsidiary companies, insurance, mutual funds, smart/debit cards, pension fund management, referral services, and underwriting, among others.
Is there a separate circular for credit card operations?
Yes, RBI has issued a separate master circular for credit card operations of banks.