HYDERABAD: The Reserve Bank of India urged banks with offices abroad to formulate a policy for overseas real-estate transactions.
According to the central bank, banks should comply with all applicable laws of the host country, city or locality while making such deals.
The RBI said it noticed that some Indian banks have committed certain lapses while buying or selling real estate and taking or letting out property on lease or rentals in some places in foreign countries.
“To avoid such lapses in future, it is advised that boards of directors of banks should lay down policies and formulate detailed operational guidelines to protect the interests of their respective banks,” the Reserve Bank in a notification Thursday.
It added that all banks dealing with such operations should comply with the Foreign Exchange Management Act, Banking Regulation and other relevant Indian laws.
“The policy should, inter alia, require the agreements for acquiring or letting out premises on rental/lease basis to incorporate a suitable exit clause,” it said.
The central bank also asked banks to ensure that all the real estate and property transactions at overseas centres are undertaken as per the board-approved policy.