RBI probing some banks on derivative deals: Govt

NEW DELHI: The government today said RBI is seeking explanations from some foreign and domestic banks where violations had been observed with respect to derivative transactions at the time of the global financial crisis.

"The RBI is in the process of calling explanation from the banks, where violations were observed during the course of inspection," minister of state for finance Namo Narain Meena told the Lok Sabha in a written reply today.

The RBI has constituted an inter-departmental group in October 2008 to review the derivative transactions of certain banks, which are active in derivative business, for assessing the systemic issues. Meena said deviations from the Foreign Exchange Management Act provisions or regulatory guidelines were observed in the annual financial inspection 2007 and 2008 and scrutiny reports of these banks. "These banks included a few domestic banks. The RBI has come to the conclusion that this is not a systemic issue," he added.

In a separate reply, Meena said two insurance companies -- Darwin Platform Life Insurance and Finance Co and Aetna Healthcare Networks India-- were selling insurance products without licence from the insurance regulator.

"The Insurance Regulatory and Development Authority has informed that they have issued a public notices and cautioned the general public not to deal with or to purchase any of the plans stated to provide insurance cover of the said companies," he added.