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
C
Both 1 and 2
D
Neither 1 nor 2
Correct answer
Explanation
Statement 1 is wrong: the RBI requires a wholly owned subsidiary of a foreign bank to have a minimum paid-up capital or net worth of ₹500 crore. Statement 2 is wrong as worded: the RBI rule is that at least 50% of the directors must be Indian nationals, NRIs or Persons of Indian Origin, with at least one-third being Indian nationals resident in India, so the board need not be 50% Indian nationals. So neither statement is correct.
Banking SectorForeign Bank RegulationsReserve Bank of IndiaForeign banksWholly owned banking subsidiariesMinimum capital requirementBoard membersIndian nationals