{"id":2427,"date":"2025-05-01T20:08:24","date_gmt":"2025-05-01T14:38:24","guid":{"rendered":"https:\/\/lotusarise.com\/qna\/?p=2427"},"modified":"2025-05-01T20:08:27","modified_gmt":"2025-05-01T14:38:27","slug":"q-with-the-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india-while-treating-foreign-banks-consider-the-following-statements","status":"publish","type":"post","link":"https:\/\/lotusarise.com\/qna\/upsc\/q-with-the-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india-while-treating-foreign-banks-consider-the-following-statements","title":{"rendered":"Q. With the reference to the rule\/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements:"},"content":{"rendered":"\n<ol class=\"wp-block-list\">\n<li>There is\u00a0<strong>no minimum capital<\/strong>\u00a0requirement for wholly owned banking subsidiaries in India.<\/li>\n\n\n\n<li>For wholly Owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">Which of the statements given above is\/are correct?<\/p>\n\n\n\n<ul class=\"wp-block-list mcq\">\n<li>1 only<\/li>\n\n\n\n<li>2 only<\/li>\n\n\n\n<li>Both 1 and 2<\/li>\n\n\n\n<li>Neither 1 nor 2<\/li>\n<\/ul>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Answer: (b) 2 only<\/strong><\/p>\n<\/blockquote>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"wholly-owned-banking-subsidiaries\">Wholly Owned Banking Subsidiaries<\/h5>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Wholly owned banking subsidiaries are\u00a0<strong>companies that are fully owned and controlled by a parent bank, with the parent holding 100% of the subsidiary\u2019s shares<\/strong>. These subsidiaries can take various forms and may operate independently of the parent bank, providing a variety of financial services.<\/li>\n\n\n\n<li>The setting up of a wholly-owned banking subsidiary (WOS) in India should have the\u00a0<strong>approval of the home country regulator.<\/strong><\/li>\n\n\n\n<li>The\u00a0<strong>minimum start-up capital requirement for a WOS would be Rs. 3 billion<\/strong>\u00a0and the WOS shall be required\u00a0<strong><mark>to maintain a capital adequacy ratio of 10 per cent or as may be prescribed<\/mark><\/strong>\u00a0from time to time on a continuous basis, from the commencement of its operations.<\/li>\n\n\n\n<li>The\u00a0<strong>parent foreign bank will continue to hold 100 per cent equity<\/strong>\u00a0in the Indian subsidiary for a minimum prescribed period of operation.<\/li>\n\n\n\n<li>The\u00a0<strong>composition of the Board of directors<\/strong>\u00a0should meet the following requirements:\n<ul class=\"wp-block-list\">\n<li><strong><mark>Not less than 50 per cent of the directors should be Indian nationals resident in India.<\/mark><\/strong><\/li>\n\n\n\n<li><strong>Not less than 50 per cent of the Directors should be non-executive directors<\/strong><\/li>\n\n\n\n<li>A\u00a0<strong>minimum of one-third of the directors should be totally independent<\/strong>\u00a0of the management of the subsidiary in India, its parent or associates.<\/li>\n\n\n\n<li>The directors shall conform to the\u00a0<strong>\u2018Fit and Proper\u2019<\/strong>\u00a0criteria as laid down in RBI\u2019s extant guidelines dated June 25, 2004.<\/li>\n\n\n\n<li>RBI\u2019s approval for the directors may be obtained as per the procedure adopted in the case of the erstwhile Local Advisory Boards of foreign bank branches.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The banking subsidiary will be governed by the provisions of the\u00a0<strong>Companies Act, 1956, Banking Regulation Act, 1949, Reserve Bank of India Act, 1934, other relevant statutes and the directives<\/strong>, prudential regulations and other guidelines\/instructions issued by RBI and other regulators from time to time.<\/li>\n\n\n\n<li>Permission for\u00a0<strong>conversion of existing branches of a foreign bank into a WOS<\/strong>\u00a0will inter alia be guided by the manner in which the affairs of the branches of the bank are conducted, compliance with the statutory and other prudential requirements and the over all supervisory comfort of the Reserve Bank.\n<ul class=\"wp-block-list\">\n<li>The\u00a0<strong>minimum net worth of the WOS on conversion would not be less than Rs. 3 billion and the WOS will be required to maintain a minimum capital adequacy ratio of 10 per cent of the risk weighted assets<\/strong>\u00a0or as may be prescribed from time to time on a continuous basis.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Which of the statements given above is\/are correct? Answer: (b) 2 only Wholly Owned Banking Subsidiaries<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[1,3],"tags":[38],"years":[49],"class_list":["post-2427","post","type-post","status-publish","format-standard","hentry","category-upsc","category-prelims","tag-indian-economy","years-49"],"acf":[],"taxonomy_info":{"category":[{"value":1,"label":"UPSC"},{"value":3,"label":"Prelims"}],"post_tag":[{"value":38,"label":"Indian Economy"}],"years":[{"value":49,"label":"2024"}]},"featured_image_src_large":false,"author_info":{"display_name":"LotusArise","author_link":"https:\/\/lotusarise.com\/qna\/author\/team-lotusarise"},"comment_info":0,"category_info":[{"term_id":1,"name":"UPSC","slug":"upsc","term_group":0,"term_taxonomy_id":1,"taxonomy":"category","description":"","parent":0,"count":1269,"filter":"raw","cat_ID":1,"category_count":1269,"category_description":"","cat_name":"UPSC","category_nicename":"upsc","category_parent":0},{"term_id":3,"name":"Prelims","slug":"prelims","term_group":0,"term_taxonomy_id":3,"taxonomy":"category","description":"","parent":1,"count":1251,"filter":"raw","cat_ID":3,"category_count":1251,"category_description":"","cat_name":"Prelims","category_nicename":"prelims","category_parent":1}],"tag_info":[{"term_id":38,"name":"Indian Economy","slug":"indian-economy","term_group":0,"term_taxonomy_id":38,"taxonomy":"post_tag","description":"","parent":0,"count":225,"filter":"raw"}],"_links":{"self":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/2427","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/comments?post=2427"}],"version-history":[{"count":0,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/2427\/revisions"}],"wp:attachment":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/media?parent=2427"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/categories?post=2427"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/tags?post=2427"},{"taxonomy":"years","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/years?post=2427"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}