Financial Services

In: Business and Management

Submitted By shashank96
Words 2266
Pages 10
| Financial Services AssignmentSubmitted to Prof. S. Shanbhag | Shashank Gupta (2013266) | 9/6/14 | Financial Services | |

| Financial Services AssignmentSubmitted to Prof. S. Shanbhag | Shashank Gupta (2013266) | 9/6/14 | Financial Services | |

Q. What does the Government of India hope to achieve with the new draft RBI guidelines for the wealth management industry? What are the reasons behind introduction of the new regulations?
A. Reserve bank of India’s guidelines for the wealth management industry prohibit banks from offering discretionary wealth management services to their customers, wherein a portfolio manager independently manages funds of individual customers and takes their investment decisions.
The discretionary portfolio management service also includes portfolios broadly directed by the customer, or those wherein the customer gives a negative list of investment products at the time of opening the account so that the fund manager ensures that such investment products are not included in the portfolio.
In case of non-discretionary services, the RBI allows banks to work through a separately identifiable department or division (SIDD) or a subsidiary. Such a subsidiary or SIDD would require to be registered with market regulator Securities and Exchange Board of India (SEBI) and comply with SEBI guidelines on providing these services, including the code of conduct, if any.
There should be an arm’s length relationship between the bank and the subsidiary if the latter is offering wealth management services, the central bank said. RBI has also stated that bank employees involved in marketing or sales of third-party products should not be given any direct incentives in cash or non-cash form linked to their performance to avoid mis-selling of products.
While the new regulations, along with a complaint redressal mechanism, will…...

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