Through a circular dated 10 April, the Reserve Bank of India (RBI) has stated that with the approval of their board of directors, international financial services centre banking units (IBUs) may undertake derivative transactions including structured products. [ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”3″ ihc_mb_template=”2″ ]However, IBUs must obtain prior RBI approval before offering any other derivative products. Before seeking the RBI’s approval, banks must ensure that their IBUs have the necessary expertise to price, value and compute the capital charge, and manage the risks associated with the products and/or transactions intended to be offered, and obtain their board’s approval to undertake such transactions.
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The business law digest is compiled by Nishith Desai Associates (NDA). NDA is a research-based international law firm with offices in Mumbai, New Delhi, Bengaluru, Singapore, Silicon Valley and Munich. It specializes in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner.
