RBI to issue final norms on subsidiarisation

Media reports indicate that the final norms on subsidiarisation of foreign banks may be issued by Reserve Bank of India soon.

RBI Deputy Governor Anand Sinha hinted that the central bank wants foreign banks to operate as wholly-owned subsidiaries of their global parent instead of being run as branches.

Once foreign banks are converted into subsidiaries, they would be almost at par with the domestic banks in terms of almost everything, including branch expansion.

RBI is awaiting clearance from the government on some of the legal and taxation issues involved in mandatory subsidiarisation.

Owing to some taxation and legal issues, RBI has not come to a final decision on the issue of subsidiary model to be followed by foreign banks, RBI Governor D Subbarao said in a conference in Mumbai.

Once foreign banks are converted into subsidiaries, they would have a separate board of directors and an asset-liability book. This would help ring fencing their operations in the country from impact of parent banks’ operations.