Banking Interpretations

NYSBL 200 and 641

DATE:   December 18, 2002

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Re: Provision of NRI Services to New York Residents by Indian Banks 

Dear [        ]:

Your letter of July 17, 2002 to Superintendent McCaul has been referred to me for reply.  You have asked whether banks which are chartered under the laws of India would be permitted under the New York State Banking Law ("Banking Law") to provide wire transfer services for Non Residents of India ("NRI") living in the United States. In your letter you cite the example of [            ], which offers NRI services in New York once a customer has opened a rupee checking account with [            ] in New York.

Under the Banking Law, a foreign banking organization ("FBO") which conducts a banking business in New York is limited to conducting its business through an agency or a branch.  However, an FBO is prohibited, with certain limited exceptions, from conducting a retail-oriented (i.e. consumer) business from a branch or agency's office.

A discussion of the provisions of the Banking Law which would arguably pertain to the conduct of an NRI business in New York by an FBO is beyond the scope of this letter. Moreover, since this would be a case of first impression for the Banking Department, which would involve a determination of Banking Department policy, we are not, at this time, prepared to render a definitive opinion.

At a minimum, however, we believe that an FBO seeking to provide retail NRI services would need to be licensed by the Banking Department as a money transmitter, a business which is essentially limited, subject to a few narrow exceptions, to the provision of transmitting money by the FBO holding a money transmitter license.  In order for an FBO to provide a broader array of NRI services, such as those provided by [             ] and [            ], it would be necessary for said FBO to obtain the approval of the applicable Federal and State regulators to acquire a full-service bank in New York from which it could conduct a retail operation. 

I trust the foregoing is responsive to your inquiry.

Sincerely yours,

Jay Kane
Assistant Counsel