What changed
RBI has allowed foreign banks to set up WOS in India, providing near national treatment, with lessons learned from the 2008 global financial crisis.
What it means for you
This change means foreign banks can create separate legal entities with local boards, ring-fenced capital, and clearer regulatory oversight, enhancing resolvability and protecting local depositors.
What you must do
- Foreign banks must choose between WOS and branch mode, with single-mode presence criterion.
- Those choosing branch mode must convert to WOS if they come within paragraph 3's purview.
- Foreign banks must furnish an undertaking to convert branches to WOS if required.
Who it affects
Foreign banks operating in India, Local regulators and depositors
What is the single-mode presence criterion?
Foreign banks must choose between WOS and branch mode, with no option to operate in both modes.
What are the advantages of local incorporation?
Creation of separate legal entities, clear delineation of assets and liabilities, and effective control to local regulators.
What is the purpose of the Scheme for Setting up WOS by foreign banks in India?
To provide near national treatment to foreign banks and enhance resolvability and protecting local depositors.