The MoU would help India seek material information and help from the UK in cases like HSBC, as also on other issues relating to British banks operating in India
London: British financial sector regulator Financial Services Authority (FSA) has entered into a fresh agreement with the Reserve Bank of India (RBI) for mutual assistance and information exchange in supervision of banks operating in both the countries, reports PTI.
This has come at a time when UK-based HSBC's staff in India has come under the scanner for deficiencies in their role as "offshore reviewers" of the global banking giant's compliance to safety mechanism against money laundering and terrorist financing activities.
A probe conducted by the US Senate's Permanent Sub- Committee on Investigations found that HSBC had exposed the US and other countries to numerous risks emanating from drug cartels, terrorist financing and money laundering activities.
Soon after the probe report was made public in the US on 17th July, the Indian government officials said that RBI would look into the matter, while the Finance Ministry's Financial Intelligence Unit (FIU) has subsequently begun a probe into HSBC's India operations.
Incidentally, the new memorandum of understanding (MoU) between RBI and the FSA was also signed on 17 July 2012.
The MoU provides for a "formal basis for cooperation in the area of banking supervision, including for the exchange of supervisory information".
Officials said that the MoU would help India seek material information and help from the UK in cases like HSBC, as also on other issues relating to British banks operating in India.
Among others, the new agreement is aimed at helping RBI and FSA to ensure that operations of the cross-border banking establishments in the two countries are "prudently conducted" and the head offices and parent entities of such banks exercise adequate and effective control over the operations of their cross-border branches and subsidiaries.