Regulatory Rule Gap Analysis for Conversion of a Foreign Bank into WOS

RBI Guidelines for setting up Wholly Owned Subsidiaries (WOS) by foreign banks operating in India, issued in November 2013 provided opportunities and challenges to foreign banks having existing presence in India. Knowing very well the endless opportunities in India for expansion of business, one of the prime foreign sector banks, committed to India, decided to convert itself into a WOS. 

The conversion was expected to involve setting up of the company, working out capital funding options, examining taxation angle, determining organizational structure, planning for business activities, adoption of technology along with various automation solutions, and detailed analysis and understanding in several other areas.

In order to assess and attend to the transition requirements, the bank appointed different teams of consultants and legal firms to address multiple issues. While doing so, the bank realized that they would also need to understand the regulatory provisions, that they would be required to adhere to, post conversion as the existing regulatory provisions applicable to them as a foreign bank, would no longer hold good.

During their interaction with the various teams of consultants and legal firms, they realized that they need different set of consultants to address this particular area as none of them had expertise in the arena of applicability of regulatory provisions. 

Well, the bank didn’t have to do hunting around, as the bank was using Knowledge Management Tools (KMT), provided by the Alpha Plus Group. KMT is a repository of regulatory instructions issued by more than 25 regulatory authorities. The bank was also using Compliance Monitoring System along with Regulatory obligations register; also provided by Alpha Plus Group. Bank’s Compliance function was aware that the Banking Advisory Team at Alpha Plus Group was the right fit to assist them in undertaking the Regulatory Rule Gap Analysis.

Alpha Plus Group Banking Advisory Team took just 45 days to complete the assignment to the satisfaction of the Bank.

While it took the bank nearly 2 years to complete all the formalities related to conversion into a WOS, just before the scheduled date of conversion, the bank once again approached Alpha Plus Group Banking Advisory Team to update the Regulatory Rule Gap Analysis for the intervening period and the same was done in just 15 days.

Along with the identification of additional/different regulatory provisions, Alpha Plus Group Banking Advisory Team, also provided its’ Point of View (suggestions) on various gap items to facilitate either getting exemptions from certain provisions, or getting outdated instructions modified for easy transition. These suggestions were highly appreciated. 

That is the “Plus” the Alpha Plus Group stands committed for!