Indian UCBs have for long been following Reserve Bank of India to permit them to provide online trading facility to their Demat Account Holders.
Industry associations viz Indian Banks’ Association and Cooperative Federations were in continuous touch with Reserve Bank of India for its permission, vide the following RBI Notification.
After examining the requests, Reserve Bank of India has permitted UCBs to offer online trading facility, with prior RBI approval.
However, in view of the high risk, RBI will consider applications from UCBs only if they meet the following criteria:-
a) UCBs to enter into a tie-up with a broking entity.
b) Assessed networth of such UCBs should not be less than Rs 500 crore as per last RBI inspection.
c) UCBs are Financially Sound and Well Managed, as per criteria prescribed in RBI circular UBD.CO.LS.(PCB).Cir.No.24/07.01.000/2013-14 dated October 1, 2013.
d) UCBs should be registered with SEBI as Depository Participants.
e) UCBs should have implemented Core Banking Solutions (CBS) fully and are offering Internet Banking services to their customers.
f) A copy of Board Resolution to the effect that they would not be offering tips/ recommendations to their customers for on-line trading and would also not be undertaking portfolio management services.
The first of approvals are expected by this year end.