British, American and Swiss regulators slapped fines
totalling $3.4 billion ( Rs.20, 900 crore) on five banks after a global
regulatory probe found them guilty of rigging the foreign exchange market.
Five banks, including HSBC, Citibank, JP Morgan Chase,
the Royal Bank of Scotland and UBS, have been fined £1.1 billion ($1.7
billion) by Britain’s market regulator, the Financial Conduct Authority for
failings over foreign exchange operations.
Simultaneously, the US Commodity Futures Trading
Commission imposed fines totalling $1.4 billion on the same five banks while
UBS faced an additional fine of $138 million from the Swiss regulator, FINMA.
The FCA slapped a fine of £225.5 million on Citibank,
while HSBC faced a penalty of £216 million. JP Morgan Chase, RBS and UBS
were fined £222.1 million, £217 million, and £233 million respectively.
The fines related to failure to control business
practices in the banks’ G10 foreign exchange trading operations, a market
that FCA said was “systematically important.”
The banks failed in their responsibility to manage
obvious risks that included conflicts of interest and confidentiality, the
“Between January 1, 2008 and October 15, 2013 ineffective
controls at the banks allowed G10 spot FX traders to put the banks’
interests ahead of those of their clients, other market participants and the
wider UK financial system.” As a result, traders were able to behave
“unacceptably” as they shared confidential information, often colluding with
other traders, and attempted to manipulate G10 spot FX currency rates.
“Today’s record fines mark the gravity of the failings we
found and firms need to take responsibility for putting it right,” said
Martin Wheatley, Chief Executive of the FCA.
Tightening norms for non-banking financial companies (NBFCs),
the Reserve Bank of India raised the capital adequacy requirement and the
net owned fund limit, among others, with an objective to mitigate risks in
With a view to streamlining the regulations for the
sector, the RBI also revoked temporary suspension on issuance of Certificate
of Registration (CoR) to companies that want to conduct business of
non-banking financial institution (NBFI).
As per the latest directives, the RBI has raised the
limit for NBFCs to maintain the net owned fund (NOF) requirement to four
times by 2017 to Rs.2 crore.
At present, the NOF requirement is at Rs.25 lakh. In a
phased manner, the NBFCs would be required to raise it to Rs.1 crore by
March, 2016, and to further double it to Rs.2 crore by 2017. “NBFCs failing
to achieve the prescribed ceiling within the stipulated time period shall
not be eligible to hold the CoR (Certificate of Registration) as NBFCs.