The approach taken by the RBI towards the entry of Foreign Banks has undergone changes. The RBI on entry of foreign banks in India has become more cautious and apprehensive and therefore changed its idea of the same. As foreign Banks in India are bound to follow the one mode presence criterion, the RBI, post the financial crisis has strongly advocated for the wholly owned subsidiary model over the branch form of presence. The Author proposes to examine this debate and analyse the stand taken by the RBI.
The paper is divided into three parts. The first part provides a picture of the Regulatory framework that governs foreign banks in India. This part gives an understanding of the licensing and procedural requirements that need to be carried out by foreign banks, for establishing their presence in India. The second part of the paper covers foreign investment in the Banking sector and analyses the debate on the mode of presence of foreign banks in India. It covers the stand of the RBI and the incentives taken by it, to provide for subsidiary model of presence. The third part of the paper provides the conclusion and recommendations of the Author.
Banking, Regulatory Framework
