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?
✓ Correct answer: d) Neither 1 nor 2
ExplanationStatement 1 is incorrect : The Reserve Bank of India (RBI) mandates a minimum capital requirement for wholly owned subsidiaries (WOS) of foreign banks operating in India.As per current regulations, the minimum paid-up equity cap- ital required is ₹500 crore to ensure financial stability and a strong capital base.The WOS was to be treated on par with the existing branches of foreign banks for branch expansion with flexibility to go beyond the existing WTO commitments of 12 branches in a year and preference for branch expansion in un- der-banked areas.Statement 2 is incorrect : According to RBI guidelines, the board of directors of a Wholly Owned Subsidiary (WOS) of a foreign bank must follow these rules :At least 51% of the board members must meet the qualifications specified under Section 10A of the Banking Regulation Act, 1949. At least two-thirds of the directors must be non-executive, meaning they are not involved in the day-to-day operations.At least one-third of the directors must be independent, with no ties to the subsidiary, its parent bank, or any related entity.
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