Q. 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: (d) Neither 1 nor 2 (official answer key)
Question from UPSC Prelims 2024 GS Paper
Explanation:
1. There is no minimum capital requirement for wholly owned banking subsidiaries in India.
This statement is incorrect. The Reserve Bank of India (RBI) does impose minimum capital requirements for wholly owned subsidiaries (WOS) of foreign banks in India. As per RBI guidelines, these subsidiaries are required to maintain a minimum paid-up capital of Rs. 500 crore (5 billion rupees).
2. For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.
This statement is incorrect.
8. Corporate governance(RBI website)
d) not less than 50 per cent directors should be Indian nationals/NRIs/PIOs subject to the condition that one-third of the directors are Indian nationals resident in India;
Therefore, the correct answer is (d)