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UPDATE 1-India allows banks to offer structured derivatives abroad without consulting RBI

consulting RBI@ (Updates to add quotes, details)

MUMBAI, May 12 (Reuters) - India's central bank said on Monday that domestic banks will be allowed to offer structured derivatives through their overseas branches even if these products are currently not allowed in India.

The change marks a revision of rules passed in 2008 that required domestic lenders to obtain approval from the central bank before offering complex derivative products not allowed at home to overseas customers.

Analysts said the move, announced in a statement and effective immediately, appeared intended to provide a level playing field for domestic banks, given that the central bank, the Reserve Bank of India, cannot restrict the overseas activities of foreign lenders.

"Indian regulations only permit plain vanilla derivative structures," said Ananth Narayan G, managing director, global markets and co-head of wholesale banking for South Asia at Standard Chartered Bank in Mumbai.

"Conditions in major overseas centres are not this stringent. Allowing foreign branches of Indian banks to deal in structured products subject to conditions in that jurisdiction could allow a level playing field for them with respect to local competition."

Traders had speculated that the RBI could also allow domestic banks to trade non-deliverable forwards (NDFs), and even potentially allow the central bank to intervene through its ownership of state-owned lenders.

However, a central bank official clarified that domestic banks would still be barred from trading in these offshore currency derivatives.

"There is no need to extend this (relaxation) to NDFs," a senior official with direct knowledge of the RBI's plans told Reuters.

(Editing by Rafael Nam and Susan Fenton)