Britain has outlined a new set of rules that will involve either overhauling the legal structures of Indian bank branches in the country or stopping of retail banking services unless there is ‘a very high level of assurance’ from Indian bank regulators in the event of their failure. The new rules are part of Britain’s efforts to minimize risks and safeguard the country’s banking system and avoid any adverse fallout from any failure of international banks who accept deposits through their branches in the country. The new rules are expected to come into effect around September. These may mainly affect ‘branches’ of international banks and not ‘subsidiaries’. According to the Bank of England, there are 145 branches of international banks operating in Britain, accounting for 31% of the total assets of the banking system. The five Indian banks which operate branches in the UK and cater mainly to the large Indian diaspora are Bank of Baroda, Bank of India, Export-Import Bank of India, Syndicate Bank and State Bank of India. The four Indian banks that operate as ‘subsidiaries’ are Union Bank of India, Punjab National Bank, ICICI Bank and Axis Bank. The banks that operate branches will have to go through a lengthy overhaul of their legal structures into subsidiaries or deliver what is called ‘a very high level of assurance’ from the bank regulator.
