RBI seeks clarity in 'Regulatory Convergence' between banks

Mumbai, Mar 18 (UNI) Reserve Bank of India (RBI) has underlined the need of bringing clarity to the extent of 'regulatory convergence' between banks and the non-banking finance companies (NBFCs).

In its report on currency and finance for the year 2004-05, the Central Bank observed that there are areas of operational convergence between banks and NBFCs due to the similarities in the activities even though there are differences in the structures.

Owing to the existence of various segments within the indian banking sector, the regulatory requirements still leave room for regulatory arbitrage and at times, circumvention.

In this context, the need for doing away with multiple regulatory juridictions over the cooperative banking sector has been recognised and further sustained efforts are needed in that direction, RBI said.

Further, there are several issues related to size and stature among commercial banks in India that need clear distinction between the largest and complex banks and, the majority of small and medium sized banks. ''This calls for a differential treatment'' in the regulatory norms and their application, RBI said.

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