The Reserve Bank of India wants foreign banks to come in as subsidiaries. In its monetary policy statement, RBI has proposed to prepare a discussion paper on the mode of presence of foreign banks in India—through branch or as wholly owned subsidiary.
Even as all foreign banks are present through branch, RBI feels that there is a considerable merit in subsidiarisation of significant cross border presence.
“For the purposes of cross border supervision and ensuring that banks that operate in India serve India interest first and also for having a standard model it is advisable to have foreign banks come in only as subsidiary,” said D Subbarao, governor, RBI.
Apart from easing the resolution process, this will also provide greater regulatory control and comfort to host jurisdictions, the policy statement said.