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RBI guidelines on investment advisory services

The Reserve Bank of India has issued guidelines on investment advisory services being offered by banks in the light RBI_LOGO_jpg_2388559fof concerns arising from conflict of interest between these activities and the marketing/distribution activities of the banks. The regulator has clarified that investment advisory services are regulated by Sebi and entities offering these services need to be registered with Sebi. In view of this banks cannot undertake these activities departmentally and those wanting to offer these services may do so either through a separate subsidiary set up for the purpose or one of the existing subsidiaries after ensuring that there is an arm’s length relationship between the bank and the subsidiary. Besides, RBI has said the sponsor bank has to obtain specific prior approval of the department of banking regulation before offering the services through an existing subsidiary or for setting up a new subsidiary. All bank sponsored subsidiaries offering the services will be registered with Sebi and regulated by the SEBI (Investment Advisors) Regulations, 2013.

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