Indian banks should move wealth management services to subsidiary: cbank

[MUMBAI] Indian banks should split wealth management and investment advisory services to avoid conflict of interest as well as address mis-selling of financial products, by creating a subsidiary, a draft report by a central bank panel said.

The banks will need to get the Reserve Bank of India’s approval to create subsidiaries, which would be then registered with the Securities and Exchange Board of India (SEBI), the panel proposed on Friday.

“To address the issue of conflict of interest arising from the single entity conducting both the activities of advisory/fund management as well as marketing, it is proposed to segregate the two functions,” the report said, adding the bank should have an ‘arm’s length’ relationship with its subsidiary.

The report also proposed the RBI should continue to supervise the bank’s activities done through the subsidiary.

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Friday, June 28th, 2013 EN

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