Title: “India’s Banking Sector Navigates Complex Regulatory Landscape: Insights from AZB & Partners”

About AZB & Partners

• Full-service Indian law firm founded in 2004
• Over 600 lawyers dedicated to delivering top-tier legal solutions
• Banking and finance practice group with approximately 50 lawyers
• Offices in Mumbai, Delhi, Bengaluru, Pune, and Chennai

Regulatory Framework for India’s Banking Sector

Key Laws and Regulations

• Banking Regulation Act (BRA) of 1949
• Reserve Bank of India (RBI) Act of 1934

Regulatory Authorities

• Reserve Bank of India (RBI)

Authorization

• Eligibility criteria for banking license applicants
  • Minimum 10 years of experience in banking and finance at a senior level
  • Politically and financially stable entity
• Foreign entities requirements
  • Compliance with anti-discrimination requirements
  • RBI approval for banking operations in India

Corporate Governance

• Rigorous requirements for bank boards
  • Composition
  • Fitness
• Foreign banks operating in India
  • Similar regulatory requirements
  • Additional limitations on shareholding and voting rights

Acquiring or Increasing Control

• RBI approval required for acquisitions exceeding 5% of capital or voting rights

Anti-Money Laundering (AML) and Know-Your-Customer (KYC) Regulations

Key Regulations

• Prevention of Money-Laundering Act (PMLA)
• RBI’s Know Your Customer Directions, 2016

Banks’ Obligations

• Establish and implement KYC policies
• Regular risk assessments
• Maintain confidentiality of customer information

Depositor Protection

• Deposit Insurance Scheme
  • Insures deposits up to INR 0.5 million

Bank Secrecy Requirements

• RBI’s Know Your Customer Directions
• Maintenance of secrecy regarding customer information
• Limited exceptions

Basel III Capital Regulations

• Minimum capital requirements for banks based on risk profiles
• Ensures banks maintain sufficient capital to absorb losses

The Complex and Evolving Indian Banking Landscape

AZB & Partners’ team of experienced banking and finance professionals guides clients through India’s regulatory environment, helping them achieve commercial objectives within a compliant framework.