State bank of Mauritius (SBM) has received RBI approval to operate in India through a wholly owned subsidiary Model — the first foreign lender to receive such a licence.
About:
In 2013, the Reserve Bank of India (RBI) released a framework for the setting up of wholly-owned subsidiaries (WOS) by foreign banks in India.
The WOS model is ‘Not mandatory’, but RBI wants foreign banks to operate under via this model due to following reasons:
To insulate banking operations in India from any crisis the parent bank may be facing
To ensure better regulation
Benefits for foreign banks under WOS model:
Treatment at par with local banks
Allowed to acquire private lenders in India
More freedom to open branches, subject to some regulations
Present Status:
State Bank of Mauritius: After the recent approval, the bank will soon operate in India under the name of SBM Bank (India) Ltd.
Singapore based DBS Bank: It is also awaiting final approval from the RBI.
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