The Reserve Bank and other Indian agencies are seeking details from British financial regulator FSA about two UK-based global banking giants HSBC and Standard Chartered whose outsourcing of key oversight jobs to India has come under the US scanner in separate probes related to issues like money laundering and terror financing.

Both the matters have come to the fore in less than a month’s time, raising serious concerns over the impact on the image of Indian outsourcing industry and possible implication on India’s fight against money laundering and terror funding.

Sources close to the development said the Indian financial sector authorities have started gathering all possible details about the two banks and any possible lapse in their compliance to regulations against money laundering and terror financing.

As part of this exercise, banking regulator RBI would soon approach UK’s Financial Services Authority (FSA), with which it had recently signed a new Memorandum of Understanding (MoU) for exchange of information and co-operation in surveillance operations, a senior official said.

Issues related to HSBC and Stanchart would be discussed at the next meeting of representatives of RBI and FSA, along with other supervisory developments and matters concerning various banks having operations in India and the UK, the official said.

New York state’s key banking regulator, the Department of Financial Services (DFS), had accused Standard Chartered Bank of hiding about 60,000 secret transactions with the Iranian government, involving a whopping $250 billion, and exposing the US financial system to terrorists, weapon dealers and drug kingpins.

HSBC’s staff in India have also come under the scanner in a separate probe in the US for deficiencies in their role as “offshore reviewers” of the global banking giant’s compliance to safety mechanism against money laundering and terrorist financing.

Stanchart, as the UK-based bank is commonly known, has also been charged by the New York State Department of Financial Services with having deficient money laundering controls in its outsourcing of work to a captive unit in India.

Another probe found that an OCC (Office of Comptroller of the Currency, which is the primary federal regulator for banks in the US) visit to India in 2007 had revealed “weak monitoring procedures” in HSBC’s internal control systems.

While HSBC has been charged with outsourcing these jobs mostly as cost saving measures, Stanchart has been accused of sending such important functions to offshore locations to escape “watchful eye” of the US regulators.

The findings of the two probes have come at a time when the voices against outsourcing of jobs to India and other locations as such are gaining momentum in the US, ahead of Presidential elections in November.

Soon after the HSBC probe became public last month, a top Finance Ministry official in New Delhi had said that the Reserve Bank of India (RBI) is looking into the matter and also promised all necessary assistance to the central bank.

Besides seeking information from the UK regulator, the RBI is also waiting for inputs from the US regulators, including the US Federal Reserve, state regulators and other agencies, sources said.

RBI’s main focus is on the banking operations of HSBC and Stanchart in India and therefore it is relying mostly on assistance from the UK, where these banks are headquartered.

The MoU between UK’s FSA and RBI, which was incidentally signed on July 17 — the same day when the US probe report against HSBC was made public — provides for cooperation in the area of banking supervision, including for the exchange of supervisory information.

The MoU would help India seek material information and help from the UK in cases like HSBC, as also on other issues relating to British banks operating in India.