With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider t

Question

With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements:

1. There is no minimum capital requirement for wholly owned banking subsidiaries in India.
2. For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.

Which of the statements given above is/are correct?

Accepted Answer

Under the RBI's framework for setting up of Wholly Owned Subsidiaries (WOS) by foreign banks in India:

1. **Statement 1 is incorrect.** The RBI prescribes a minimum initial paid-up voting equity capital of ₹500 crore for a WOS of a foreign bank. So there is a clear minimum capital requirement.

2. **Statement 2 is correct.** The WOS framework requires that not less than 50% of the directors of the WOS should be Indian nationals resident in India, to ensure local representation on the board.

Hence, only statement 2 is correct.

Answer

1 only

Answer

2 only

Answer

Both 1 and 2

Answer

Neither 1 nor 2

Explanation

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