Financial Daily from THE HINDU group of publications
Thursday, May 18, 2006


News
Features
Stocks
Cross Currency
Shipping
Archives
Google

Group Sites

Money & Banking - Regional Rural Banks
Markets - Mutual Funds


Regional rural banks to market MF units

Our Bureau

Considered a profitable avenue; scope to expand business


RBI conditions The bank should not acquire the units from the secondary market. Should not buy back the units from its customers. Retailing of the units may be confined to select branches

Mumbai , May 17

The Reserve Bank has allowed regional rural banks (RRBs) to act as agents for marketing mutual fund units.

Apart from expanding the scope of business of RRBs, marketing of the MF units is considered a profitable avenue for banks.

As per an RBI notification, RRBs may enter into agreements with mutual funds for marketing the units subject to conditions.

It has been stipulated that the banks should act only as an agent of the customers, forwarding their applications for purchase or sale of the units to the mutual fund or Registrar or transfer agents. The purchase of the units would be at the risk of the customers and without the bank guaranteeing any assured return.

The bank should not acquire the units from the secondary market. Also, it should not buy back the units from its customers.

The bank holding custody of MF units on behalf of its customers should ensure that its own investments and the investments belonging to its customers are kept distinct from each other. And, retailing of the units may be confined to select branches so as to ensure better control.

RBI has also advised the RRBs to comply with the existing "know-your-customer" and "Anti-Money-Laundering" guidelines in respect of the applicants for the MF units.

They should also work out adequate and effective control mechanisms in consultation with their sponsor banks.

More Stories on : Regional Rural Banks | Mutual Funds | RBI & Other Central Banks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page



Stories in this Section
Regional rural banks to market MF units


Anti-outsourcing day observed
RBI Act amendments: `Positive for banking sector'
RBI gets more flexibility on CRR, SLR; Bill passed
MoneyGram to expand agents network
Govt wants debt cap hike for Ultra Mega projects
Bank of Rajasthan deposit rates up
Baroda co-op bank licence cancelled
KVB board meet to consider bonus, rights issues
P.L. Gairola is Dena Bank CMD



The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line