RBI Rules on Foreign Banks
Question
With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements: Which of the statements given above is/are correct?
- 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.
Options
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Explanation
Statement 1 is incorrect; the RBI mandates a strict minimum capital requirement (initially set at ₹500 crore) for establishing a Wholly Owned Subsidiary (WOS) of a foreign bank. Statement 2 is correct; RBI corporate governance guidelines dictate that at least 50% of the board members of a WOS must be Indian nationals (and non-executive directors).
Answer: (b).
Question details
Year
2024
Paper
GS Paper 1
Question
Q49
Subject
Economy
Sub-topic
Banking & RBI
Type
Statement-based
Difficulty
Hard
Nature
Static
Source hint
RBI Corporate Governance Guidelines for Foreign Wholly Owned Subsidiaries
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