Standard Chartered under RBI Review for Derivatives Sales and Risk Control Lapses

According to news reports, Standard Chartered Plc is currently under the scanner of the Reserve Bank of India due to concerns related to the sale of derivatives products, especially to small and medium-sized enterprises. The regulatory review also covers the bank’s risk governance framework and accounting treatment in earlier financial years.

RBI Reviews Derivative Sales Process

According to news reports, the Reserve Bank of India has raised concerns over Standard Chartered’s process of selling complex derivative products, especially target redemption forwards, to small and medium-sized enterprises. These instruments, while potentially lucrative, are also highly risky and can lead to substantial losses if not understood clearly. It was found that the buyers of these contracts were not properly informed about the associated risks.

Focus on Risk Governance and Internal Controls

The RBI is also reviewing the internal risk governance framework of Standard Chartered. Concerns have been raised about how the bank monitors and manages the risks tied to such structured financial products. This scrutiny is part of a wider review of the bank’s controls and compliance mechanisms to ensure that such instruments are being sold responsibly and in line with regulatory expectations.

Accounting Treatment and Reserve Maintenance Concerns

In addition to the derivative sales, issues have been flagged with the bank’s accounting treatment of forward rate agreements and the maintenance of regulatory reserves in previous financial years. These findings are reportedly a result of routine inspections conducted by the RBI to ensure financial stability and compliance across banks operating in India.

Standard Chartered Presence in India

Standard Chartered has been a part of the Indian financial landscape for over 165 years. With a network of 100 branches across 42 cities, the bank is a significant foreign player in the Indian market. Its operations span corporate and investment banking, retail banking, and wealth management.

Read More: Welcure Share Price Hits 5% Upper Circuit After Securing ₹517 Crore Global Sourcing Mandate! 

Conclusion 

There has been no formal enforcement action announced so far. The review process is still ongoing. The RBI has not made any public statements, and such reviews often conclude with internal directives or guidance rather than public disclosures.

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.