RBI is­sues no­ti­fi­ca­tion to banks on over­seas real es­tate trans­ac­tions

Accommodation Times - - .. Current Affairs.. -

Re­serve Bank of In­dia is­sued a no­ti­fi­ca­tion to all the banks re­gard­ing the pol­icy for sale and pur­chase of property and ac­quir­ing/let­ting out property on lease/ rental ba­sis by banks at their over­seas cen­tres, they have men­tioned that the banks should en­sure that all the trans­ac­tions which are car­ried on are un­der­taken in ac­cor­dance with the board-ap­proved pol­icy.

The no­ti­fi­ca­tion was is­sued be­cause, It has come to our no­tice that some In­dian banks have com­mit­ted cer­tain lapses in pur­chase/sale of real es­tate as well as in ac­quir­ing/let­ting out property on lease/rental ba­sis at some places in for­eign coun­tries.

In or­der to avoid such lapses in fu­ture it is ad­vised that Boards of Di­rec­tors of banks should lay down poli­cies and for­mu­late de­tailed op­er­a­tional guide­lines to pro­tect the in­ter­est of their re­spec­tive banks.

The pol­icy/ guide­lines should be com­pli­ant with the pro­vi­sions of For­eign Ex­change Man­age­ment Act, 1999, Bank­ing Reg­u­la­tion Act, 1949 and other rel­e­vant In­dian laws. The pol­icy should, in­ter­lay, re­quire the agree­ments for ac­quir­ing /let­ting out premises on rental/lease ba­sis to in­cor­po­rate a suit­able exit clause.

While un­der­tak­ing trans­ac­tions in the na­ture of sale and pur­chase of property and ac­quir­ing/let­ting out property on lease/ rental ba­sis at over­seas cen­tres banks should also en­sure that they com­ply with all the ap­pli­ca­ble laws of the host coun­try / city or lo­cal­ity.

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