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?
A
1 only
B
2 only
Correct Answer
C
Both 1 and 2
D
Neither 1 nor 2
Explanation
Statement 2 is correct because RBI guidelines for Wholly Owned Subsidiaries (WOS) of foreign banks mandate that at least 50% of the board of directors must be Indian nationals. Statement 1 is incorrect because RBI prescribes a strict minimum paid-up equity capital requirement (currently ₹500 crore) for such subsidiaries to ensure financial stability. The core concept being tested is the regulatory and corporate governance framework governing the entry and operation of foreign banks in India.
Banking SectorForeign Bank RegulationsReserve Bank of IndiaForeign banksWholly owned banking subsidiariesMinimum capital requirementBoard membersIndian nationals