The Reserve Bank of India proposed in a statement yesterday that it would allow foreign banks’ wholly owned subsidiaries to open branches anywhere in India as local banks have been allowed to do. Most foreign banks in India operate as branches as not wholly-owned subsidiaries at the moment, reported Reuters. Foreign-owned subsidiaries would have to have a capital of at least Rs 500 crore ($80 million) and capital adequacy ratios of at least 10 per cent under the proposal.
Southeast Asia’s largest bank DBS would be willing to expand under the new rules immediately, reported Bloomberg, though banks were cautious commenting to media until they could examine the new rules in detail. The conversion would place the foreign banks under additional regulatory oversight, with the RBI suggesting that around 12 foreign banks were “systemically important” enough – i.e., large enough – to be compulsorily required convert to the new structure, reported Mint.