The Reserve Bank of India (RBI) has begun a special scrutiny of its regulatory procedures following the R300-crore bank at Citibank's Gurgaon branch, with the idea of fine-tuning or changing its system if needed.
It will conclude its investigations within two weeks. As things stand, the RBI may not take a strict stand on regulating foreign banks but possible changes may be considered. “A fraud of this nature cannot lead to cut out the whole category and there will be no change in the RBI processes,” said a senior official at RBI on condition of anonymity.
“The special scrutiny that RBI has started in this matter beginning Monday will also see if the RBI needs to be concerned about something more that what has happened.”
The official said that the results of the investigation are expected in around two weeks, after which it can reach at some conclusion. Significantly, the RBI will soon put out a discussion paper on the functioning of foreign banks in India, though the latest incident is not expected to influence the issue and focus more on access to the local market. If the special scrutiny finds some gaps, it might result in calls for change.