Govt mulls strict norms for wealth management advisors

New Delhi: The government is pooling in its regulatory resources to frame a comprehensive rule-book for wealth management advisors and has sought inputs for the same from the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI) and other financial sector regulators, reports PTI.

The move follows an estimated Rs400 crore fraud allegedly perpetuated by a relationship manager at the Gurgaon branch of Citibank and initial probe into the matter pointing towards various loopholes in existing regulations.

Besides RBI and SEBI, other financial sector regulators, namely commodity regulator Forward Markets Commission (FMC), insurance watchdog Insurance Regulatory and Development Authority (IRDA) and pension fund regulator Pension Fund Regulatory and Development Authority (PFRDA), will also be roped in to formulate the all-encompassing wealth management guidelines.

After their initial probe into the Citibank case, banking regulator RBI and capital market watchdog SEBI have felt the need for stricter regulations for wealth management advisors, given the huge surge in the size of assets managed by them.

Although there are no official figures for it, the size of wealth management industry is pegged at about $1 trillion—nearly double the size a couple of years ago.

Sources said that the existing practices and regulations for wealth management space from all the regulators will be collated to frame the final guidelines and an announcement to this effect could be made in the Parliament during annual Union Budget presentation next month.

The issue is likely to be discussed in the next meeting of the newly constituted Financial Stability and Development Council (FSDC), a high-level body authorised to deliberate on inter-regulatory coordination matters, sources said.

The first meeting of FSDC was held late last month and was attended by the finance minister as also chiefs of RBI, SEBI and IRDA among others.

Wealth managers, who mostly act as investment advisors for high net-worth individuals (HNIs), are currently regulated by different regulators as per the sectors in which they are offering their services.

However, there are no comprehensive rules to regulate the wealth managers for services across various sectors such as banking, markets, insurance, commodity and pension funds.

After the Harshad Mehta scam in 1992, RBI banned banks’ portfolio management services. Since then, banks are limiting their wealth management business to advising their wealthy clients without taking custody of the capital or assets.

RBI has now asked banks about their wealth management practices and whether they or their relationship managers get the power of attorney from the clients, sources said.

SEBI does not allow brokers to insist on PoAs from their clients and might suggest the same for bankers and others.

As such, the portfolio management services in the capital market are regulated by SEBI, but these regulations do not cover asset classes such as fixed deposits and other banking products, insurance, commodity and pension funds.

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ICCI Bank to allow withdrawals up to Rs1,000 at merchant outlets

Mumbai: The country’s largest private sector lender ICICI Bank today introduced cash withdrawal facility for customers for withdrawing up to Rs1,000 at point of sale (PoS) terminals, with the option to buy or not buy at merchant outlets, reports PTI.

ICICI is the first lender to offer this facility in the country, the bank said in a release here. At present, cash withdrawal using a plastic card is available only at automated teller machines (ATMs).

The new facility will be available for all ICICI Bank debit card holders who can withdraw up to Rs1,000 a day as per Reserve Bank of India (RBI) guidelines, with or without associated purchase transactions at PoS terminals, the bank said in a statement here today.

Launching the facility, managing director and chief executive Chanda Kochhar said, “ICICI Bank continues to be at the forefront of offering new functionalities and convenience to customers by leveraging technology. The launch of cash withdrawals at PoS terminals will create a new mode of access to financial services, which not only enhances customer service but can also be leveraged for financial inclusion.”

The ability to offer cash is likely to be attractive to merchants, as it means they can reduce the risk and cost associated with managing cash.

ICICI Bank has consolidated assets of over $115 billion as of end September. It has subsidiaries in the insurance space, securities brokerage, mutual funds and private equity. The bank is present in 18 countries.

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Recommendations on 2G spectrum prices to be out soon: TRAI

New Delhi: After facing stiff resistance from incumbent operators on linking second generation (2G) spectrum prices with those of third generation (3G), the Telecom Regulatory Authority of India (TRAI) today said it would soon submit fresh recommendations on the issue to the government, reports PTI.

"In May 2010 recommendations, we had clearly said we will be apprising the government of results of our study. So the results of the study will be apprised in the course of next few days," TRAI chairman JS Sarma told reporters here.

Last May, TRAI had floated the proposal for linking 2G spectrum prices with 3G radio wave rates. The proposal came after the auction for third-generation (3G) spectrum raked in over Rs67,000 crore for the government.

However, due to stiff opposition from the existing GSM service providers, TRAI had said it would revisit the issue and finalise the proposal.

"This (proposal) is regarding the pricing of spectrum, pricing to be done in future," Mr Sarma said.

TRAI's earlier recommendations included levying a one-time charge on operators holding excess 2G spectrum beyond 6.2 MHz.

It had suggested that every Mhz of spectrum beyond 6.2 should be linked to 3G auction bid and also at the time of renewal of licences.

Leading incumbent operators (especially Bharti and Vodafone) whose licences will come up for renewal over the next few years would have had to pay very high price in case the TRAI proposals would have taken effect.

The regulator was earlier expected to submit its proposal by the end of December 2010.

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