is one of the key criteria that RBI is using to vet applications for WOS. Foreign banks in India will be treated in a similar manner as to which Indian banks are treated in their home countries.
“The flip side that a lot of people are missing is that this is a great opportunity for Indian banks which are looking at growing in other countries. Indian lenders have been looking at expanding in Latin America and Africa where the Indian diaspora is increasing as Indian corporates are expanding their operations there,” said Robin Roy, associate director- financial services at PwC India.
RBI has also stated that foreign banks which convert to the WOS model of banking would have easier conditions for expansion in India, as they would receive near national treatment. WOS would be permitted to open branches in Tier 1 to 6 centres (except at certain sensitive locations) without having the need to take prior permission from RBI in each case.
To prevent domination by foreign banks, restrictions would be placed on further entry of new WOSs of foreign banks or capital infusion, when the capital and reserves of the WOSs and foreign bank branches in India exceed 20% of the capital and reserves of the banking system.
The guidelines specify that WOS of foreign banks may dilute their stake to 74% or less in accordance with the extant foreign direct investment policy on foreign investment in banking sector and list on stock exchanges in India.
“Listing in India would demonstrate long term goal of players aiming at growing here and give them the ability to raise capital domestically for their Indian operations,” said Monish Shah, senior director, Deloitte in India.