Reserve Bank of India partially relaxes restrictions on SBM Bank India

The Reserve Bank of India (RBI) has announced that it had decided to partially relax the restrictions on SBM Bank (India) until March 15, by allowing ATM and point-of-sale transactions on internationally active debit cards issued by the bank.

Last week, the RBI ordered SBM Bank to stop all transactions under the liberalised remittance scheme (LRS) – which allows Indian residents to send up to $250,000 abroad each financial year – until further notice, citing “material supervisory concerns” but without giving any further details.

Several Indian fintechs were impacted by the order, including neobanking fintechs Niyo and Zolve, which was started by former TaxiForSure cofounder Raghunandan G, US-stock investment platforms such as IndMoney and Vested Finance, US-stock investment platforms such as IndMoney and Vested Finance and multiple industry leaders.

SBM Bank was engaging with the RBI to address “supervisory concerns”, the bank’s Mauritius-based holding company SBM Holdings said a few days later.

“The bank has since initiated corrective actions and made a submission for relaxation of the restrictions,” the RBI said in a statement. The RBI said the relaxation under LRS was based on SBM’s submission and also to provide relief to affected customers.

SBM Bank India 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.

Source: Reserve Bank of India, Economic Times