New Delhi [India], May 20 : The Reserve Bank of India (RBI) has decided to grant "in-principle" approval to Emirates NBD Bank for setting up a Wholly Owned Subsidiary (WOS) in India.
The nod to the UAE-headquartered has been accorded under the "Scheme for Setting up of WOS by foreign banks in India".
Emirates NBD Bank PJSC is currently carrying on banking business in India in a branch mode through its branches located in Chennai, Gurugram and Mumbai.
The in-principle approval has been granted to the bank for setting up a wholly owned subsidiary (WOS) through the conversion of its existing branches in India.
"The RBI would consider granting a licence for commencement of banking business in WOS mode under Section 22 (1) of the Banking Regulation Act, 1949 to Emirates NBD Bank PJSC, on being satisfied that the bank has complied with the requisite conditions laid down by RBI as part of "in-principle" approval," RBI said.
At present, foreign banks have a presence in India only through branches.
According to RBI, local incorporation of a foreign bank creates a separate legal entities, having its own capital base and local board of directors.
It also ensures that there is a clear delineation between the assets and liabilities of the domestic bank and those of its foreign parent and clearly provides for ring-fenced capital and assets within the host country.
It imparts clarity and certainty with respect to the applicability of the laws of the country of incorporation on the locally incorporated subsidiary.
Importantly, a local incorporation provides effective control to the local regulators.
Under the Scheme for Setting up of Wholly Owned Subsidiaries (WOS) by foreign banks in India, all foreign banks that are not carrying on banking business in India and that wish to do so in the future shall carry on banking business in India only through a wholly owned subsidiary.
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