UPSC Prelims 2024 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?

Explanation: 

• The RBI does have a minimum capital requirement for wholly owned banking subsidiaries set at ₹5 billion. This applies to both new foreign banks setting up a subsidiary in India and existing foreign banks with a branch presence that want to convert to a wholly owned subsidiary. So, Statement 1 is incorrect.
  
  
• As per the Scheme for setting up of wholly owned subsidiaries by foreign banks in India: not less than 50 per cent directors should be Indian nationals/NRIs/PIOs subject to the condition that one-third of the directors are Indian nationals resident in India. So, Statement 2 is correct.
  
  

Therefore, option (2) is the correct answer.

Subject: Economics | Money and Banking