SBM Bank working with RBI to resolve issues

SBM Bank (India) has confirmed that it is currently in talks with the Reserve Bank of India (RBI) to address “supervisory concerns” following the regulator’s decision to bar the bank from participating in certain transactions.

The central bank had issued an order on Monday, halting all transactions under the liberalised remittance scheme (LRS) until further notice, citing “material supervisory concerns”. According to a banking source, the RBI had concerns that certain overseas money transfer practices of SBM’s fintech partners did not comply with the appropriate procedures.

The LRS scheme allows Indian residents to send up to $250,000 abroad each financial year. SBM Bank India is a unit of the State Bank of Mauritius and became the first foreign bank to receive a universal banking licence under an Indian scheme for wholly-owned subsidiaries, which allowed foreign lenders to compete with Indian banks.

The State Bank of Mauritius (SBM) established its subsidiary in India (SBM Bank India) in December of 2018. This subsidiary became the first foreign bank to be granted a universal banking license under a scheme for wholly-owned subsidiaries in India. The scheme allows foreign banks to participate in direct competition with Indian banks.