RBI likely to approach UK's FSA on charges against offshore units of HSBC, SCB
13 August 2012
The Reserve Bank of India (RBI) is likely to approach the UK's Financial Services Authority (FSA) seeking details about the alleged violations of US rules by British banks HSBC and Standard Chartered (SCB), while outsourcing tasks to units in India.
Authorities in the US have slammed the two British banks for lax controls over their off-shore units in India, especially their alleged deficient money laundering controls and deals with parties in Iran.
Last month, the RBI and the FSA had signed a memorandum of understanding (MoU) relating to cooperation in the area of banking supervision and surveillance operations. The matter would be taken up the RBI when its officials meet counterparts in the UK regulatory body soon, according to government sources.
The two British banks have come under fire from regulators and politicians in the US for maintaining lax controls over their offshored units in India, to which they outsource tasks from their American offices. With elections due in America later this year, outsourcing of jobs to countries like India has become a politically sensitive issue with both Republicans and Democrats attacking corporates who send jobs overseas.
But serious concerns have been raised in the UK over the 'targetting' of British banks by American regulators. Many fear that some of the regulators are gunning for British banks as they want to undermine the importance of London as a global financial hub.
''I think it's a concerted effort that's been organised at the top of the US government,'' said Labour MP John Mann, who is also a member of the treasury select committee. ''I think this is Washington trying to win a commercial battle to have trading from London shifted to New York.''