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 ?
Show answer
Answer: D. Statement 1 is wrong: under RBI's 2013 framework, a wholly owned subsidiary (WOS) of a foreign bank needs a minimum paid-up voting equity capital of ₹500 crore. Statement 2 is wrong: the rule is that at least 50% of directors must be Indian nationals, NRIs or persons of Indian origin, with at least one-third being Indian nationals resident in India, so it is not a flat 50% Indian nationals rule. So neither.
Watch for: Statement 2 is very close to the real rule; the trap is that NRIs and PIOs also count towards the 50%.
Why the other options are wrong
- A. Wrong because a WOS must meet a minimum capital requirement of ₹500 crore.
- B. Wrong because the 50% board rule includes NRIs and persons of Indian origin, not only Indian nationals.
- C. Wrong because Statement 1 is clearly false.
Source to check: RBI, 'Scheme for Setting up of Wholly Owned Subsidiaries by Foreign Banks in India' (November 2013)
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.