WHOLLY-OWNED SUBSIDIARY (FOREIGN BANKS)

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.