India Regulatory Brief: India’s Central Bank to Toughen Cyber Security Compliance and FSSAI Steps Up Food Safety Inspections
Central Bank Directive to Tighten Cyber Security after Debit Card Data Breach
India’s central bank, the Reserve Bank of India (RBI), has called on banks to ensure tightened cyber security norms after the country’s largest data breach involving debit cards went undetected for three months. All lenders (banks and payment network service providers) will now need to report on their cyber security issues to the RBI on a real-time basis. Another proposal in the offing is a suggestion that banks centralize their cyber security monitoring and have a dedicated operations team in place for the same instead of outsourcing such surveillance.
The current urgency notwithstanding, the RBI directed banks (in as early as June) to collaborate on matters of cyber security as per global best practices to facilitate timely containment of cyber risks. The banking regulator has repeatedly recommended that banks report all unusual activity, irrespective of the success or failure of such cyber intrusions, so that necessary steps can be taken to fortify against future hacks. In order to ensure its directives are complied with, the RBI will begin conducting annual cyber audits of banks, starting in 2017.
As for the data breach, card data belonging to 3.2 million customers was stolen from a network of Yes Bank Ltd. ATMs managed by Hitachi Payment Services Pvt. Ltd. between 25 May and 10 July this year. Banks implicated in the hack include the State Bank of India (SBI), ICICI Bank Ltd., HDFC Bank Ltd., and Yes Bank. A forensic investigation report by SISA Information Security Pvt. Ltd. on the data breach is expected by November.
100% Foreign Investment Now Allowed in Category of ‘Other Financial Services’
On October 20, India’s banking regulator announced that it will allow foreign investment of up to 100 percent under the automatic route in the category of ‘other financial services’. ‘Other financial services’ includes activities regulated by any financial sector regulator, such as the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority of India (IRDAI), the Pension Fund Regulatory and Development Authority, and the National Housing Bank. Investments ‘under the automatic route’ do not require additional conditional government approval. This development is in addition to the recent liberalization in the FDI policy for Non-Banking Finance Companies (NBFCs).
However, the RBI clarified that those financial services activities not regulated by an Act of parliament or by any financial sector regulator, can accept 100 percent foreign direct investment (FDI) – upon government approval. Finally, financial sectors that are legally regulated and controlled by defined FDI limits, such as insurance, will continue to impose existing restrictions on foreign investments.
Increased Compliance Checks by Food Safety Regulator
The Food Safety and Standards Authority of India (FSSAI) recently increased the frequency of its surprise checks to ensure the compliance of hotels and restaurants with established hygiene norms. Those coming under the regulator’s scanner say that the FSSAI have conducted frequent and surprise food quality and safety checks in the past few months. The FSSAI operates under the Ministry of Health and is responsible for the regulation and surveillance of the manufacture, processing, distribution, sale, and import of food in the country. Among its tasks are also the licensing and registration of food businesses.
The heightened activity on the part of FSSAI comes in the wake of last year’s controversy over contaminants purportedly found in Nestlé’s Maggi noodles. The regulator has also sharpened its focus on five star hotels, with surprise audits and raids on their restaurants, hoteliers, and restaurateurs by food safety officials to check on inventory, processes, hygiene levels, and required licenses.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
Doing Business in India 2016 is designed to introduce the fundamentals of investing in India. As such, this comprehensive guide is ideal not only for businesses looking to enter the Indian market, but also for companies who already have a presence here and want to stay up-to-date with the most recent and relevant policy changes.
Pre-Investment Due Diligence in India
In this issue of India Briefing Magazine, we examine issues related to pre-investment due diligence in India. We highlight the different regulatory, tax, and socio-economic issues that a company should be aware of before entering the Indian market. We also detail some of the topics related to entry structures while investing in the Indian market, as well as cultural and HR due diligence, which may differ from state to state.
Strategies for Repatriating Funds from India
In this issue of India Briefing Magazine, we look at issues related to repatriating funds from India. We highlight the unique regulations for sending funds back from India, examine the various strategies companies can make use of while repatriating, and look at remittance procedures for different types of Indian entities. Finally, we give some tips on how expats can remit their Indian money to their home countries.