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Banking Regulations
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UPSC Prelims 2024 Paper-I 📅 16 Jun, 2024

With reference to the 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 percent of the board members should be Indian nationals.

Which of the statements given above is/are correct?

A
1 only
B
2 only
C
Both 1 and 2
D
Neither 1 nor 2
Result Summary
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APEDIA

UPSC Prelims
2024 • 16 Jun, 2024 • Paper-I
With reference to the 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 percent of the board members should be Indian nationals.

Which of the statements given above is/are correct?
Correct Answer
Neither 1 nor 2
Economy: Banking Regulations.Context: Foreign Banks WOS.Details: Both statements are incorrect. Wholly Owned Subsidiaries WOS of foreign banks must have a minim......
Ref/Book : UPSC Prelims 2024
Ref. Subject Economy
Chapter -
Ref. Topic Banking Regulations
Pg. No -
💡 Analysis & Explanation
Economy ▼
Banking Regulations.
Context ▼
Foreign Banks WOS.
Details ▼
Both statements are incorrect. Wholly Owned Subsidiaries WOS of foreign banks must have a minimum paid up equity capital of INR 500 crore. Furthermore, the RBI framework states that not less than two thirds of the directors should be non executive directors, and at least one third of the directors should be independent. There is no strict rule demanding exactly 50 percent Indian nationals.
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