Context:
The Reserve Bank of India (RBI) has updated its Master Direction on Deposits and Accounts, offering operational flexibility to banks in handling rupee accounts of their overseas entities.
Key Highlights
1. Relaxation for Foreign Operations
- Banks can now open or close non-interest bearing rupee accounts in the name of their:
- Overseas branches
- Correspondent banks
- This can be done without prior approval from the RBI.
2. Exception for Pakistani Entities
- Special approval is still required for:
- Rupee accounts in the name of branches of Pakistani banks operating outside Pakistan.
- This move reflects India’s heightened regulatory caution regarding cross-border transactions involving Pakistan.
Regulatory Significance
- The relaxation promotes ease of doing business for Indian banks with international operations.
- Aligns with India’s goal of internationalizing the rupee by encouraging its usage in cross-border transactions.
- The Pakistan-specific clause underscores the RBI’s risk-based regulatory approach.
This update simplifies banking arrangements in global trade and remittances, while maintaining national security considerations.
Mint
