Standard Chartered Bank is facing closer scrutiny from the Reserve Bank of India (RBI) after concerns were raised about the sale of complex derivatives and weaknesses in its risk management practices. According to sources familiar with the matter, the RBI has found issues in how the bank sold target redemption forwards (TRFs) — a derivative product known for its risk of heavy losses — especially to small and medium-sized enterprises (SMEs).
Insiders claim that many of these SME customers were not properly informed about the risks of these contracts, leading to potential regulatory violations. The ongoing review by the RBI is reportedly focusing on derivatives handling and risk governance within the bank’s Indian operations.
Besides the derivative sales issue, RBI has also asked how Standard Chartered maintained reserves and accounting treatment of forward rate agreement (FRA) trades in past years.
A Mumbai-based spokesperson from Standard Chartered said the RBI’s inspections are a part of their annual routine and any observations are taken seriously and addressed. But declined to comment on the specific findings.
No formal action or penalty has been announced by RBI yet and the investigation is ongoing.
Standard Chartered has been in India for over 165 years and has around 100 branches in 42 cities. Its main businesses in India are corporate and investment banking, retail banking and wealth management.
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Source: Moneycontrol
News Desk
