{"id":92124,"date":"2025-06-01T11:15:21","date_gmt":"2025-06-01T11:15:21","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=92124"},"modified":"2025-06-01T11:15:21","modified_gmt":"2025-06-01T11:15:21","slug":"with-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india\/","title":{"rendered":"With reference to the rule\/rules imposed by the Reserve Bank of India"},"content":{"rendered":"<p>With reference to the rule\/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements:<\/p>\n<ul>\n<li>There is no minimum capital requirement for wholly owned banking subsidiaries in India.<\/li>\n<li>For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.<\/li>\n<\/ul>\n<p>Which of the statements given above is\/are correct ?<\/p>\n<p>[amp_mcq option1=&#8221;1 only&#8221; option2=&#8221;2 only&#8221; option3=&#8221;Both 1 and 2&#8243; option4=&#8221;Neither 1 nor 2&#8243; correct=&#8221;option2&#8243;]<\/p>\n<div class=\"psc-box-pyq-exam-year-detail\">\n<div class=\"pyq-exam\">\n<div class=\"psc-heading\">This question was previously asked in<\/div>\n<div class=\"psc-title line-ellipsis\">UPSC IAS &#8211; 2024<\/div>\n<\/div>\n<div class=\"pyq-exam-psc-buttons\"><a href=\"\/pyq\/pyq-upsc-ias-2024.pdf\" target=\"_blank\" class=\"psc-pdf-button\" rel=\"noopener\">Download PDF<\/a><a href=\"\/pyq-upsc-ias-2024\" target=\"_blank\" class=\"psc-attempt-button\" rel=\"noopener\">Attempt Online<\/a><\/div>\n<\/div>\n<section id=\"pyq-correct-answer\">The question concerns the rules imposed by the Reserve Bank of India (RBI) on foreign banks setting up operations in India, specifically regarding Wholly Owned Subsidiaries (WOS). Let&#8217;s evaluate the statements:<br \/>\nStatement 1: &#8220;There is no minimum capital requirement for wholly owned banking subsidiaries in India.&#8221; This statement is incorrect. RBI guidelines require foreign banks operating as WOS in India to maintain a minimum initial assigned capital (net worth) of \u20b9500 crore.<br \/>\nStatement 2: &#8220;For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.&#8221; This statement is correct. RBI guidelines for WOS stipulate that a majority of the board members (i.e., at least 50%) should be Indian nationals, and the Chairperson of the board should be an Indian national resident in India.<br \/>\nTherefore, only statement 2 is correct.<br \/>\n<\/section>\n<section id=\"pyq-key-points\">RBI permits foreign banks to operate in India through branches or by setting up Wholly Owned Subsidiaries (WOS). The WOS model is generally preferred by RBI as it provides greater regulatory oversight and ring-fences the Indian operations from potential problems faced by the parent entity abroad. Specific guidelines are in place for WOS regarding capital requirements, governance, priority sector lending, and branching.<br \/>\n<\/section>\n<section id=\"pyq-additional_information\">The policy for WOS of foreign banks was introduced by the RBI to allow foreign banks greater flexibility in expanding their branch network in India compared to the restrictions faced by foreign bank branches. WOS are treated on par with domestic banks in terms of branching rules, although they have specific requirements regarding capital, governance, and prudential norms. The requirement for a majority of Indian directors is aimed at ensuring local understanding and responsiveness to the Indian market and regulatory environment.<br \/>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>With reference to the rule\/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements: There is no minimum capital requirement for wholly owned banking subsidiaries in India. For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals. Which of the statements &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"With reference to the rule\/rules imposed by the Reserve Bank of India\" class=\"read-more button\" href=\"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india\/#more-92124\">Detailed Solution<span class=\"screen-reader-text\">With reference to the rule\/rules imposed by the Reserve Bank of India<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1092],"tags":[1103,1120,1190],"class_list":["post-92124","post","type-post","status-publish","format-standard","hentry","category-upsc-ias","tag-1103","tag-economic-development","tag-money-banking","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>With reference to the rule\/rules imposed by the Reserve Bank of India<\/title>\n<meta name=\"description\" content=\"The question concerns the rules imposed by the Reserve Bank of India (RBI) on foreign banks setting up operations in India, specifically regarding Wholly Owned Subsidiaries (WOS). Let&#039;s evaluate the statements: Statement 1: &quot;There is no minimum capital requirement for wholly owned banking subsidiaries in India.&quot; This statement is incorrect. RBI guidelines require foreign banks operating as WOS in India to maintain a minimum initial assigned capital (net worth) of \u20b9500 crore. Statement 2: &quot;For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.&quot; This statement is correct. RBI guidelines for WOS stipulate that a majority of the board members (i.e., at least 50%) should be Indian nationals, and the Chairperson of the board should be an Indian national resident in India. Therefore, only statement 2 is correct. RBI permits foreign banks to operate in India through branches or by setting up Wholly Owned Subsidiaries (WOS). The WOS model is generally preferred by RBI as it provides greater regulatory oversight and ring-fences the Indian operations from potential problems faced by the parent entity abroad. Specific guidelines are in place for WOS regarding capital requirements, governance, priority sector lending, and branching.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"With reference to the rule\/rules imposed by the Reserve Bank of India\" \/>\n<meta property=\"og:description\" content=\"The question concerns the rules imposed by the Reserve Bank of India (RBI) on foreign banks setting up operations in India, specifically regarding Wholly Owned Subsidiaries (WOS). Let&#039;s evaluate the statements: Statement 1: &quot;There is no minimum capital requirement for wholly owned banking subsidiaries in India.&quot; This statement is incorrect. RBI guidelines require foreign banks operating as WOS in India to maintain a minimum initial assigned capital (net worth) of \u20b9500 crore. Statement 2: &quot;For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.&quot; This statement is correct. RBI guidelines for WOS stipulate that a majority of the board members (i.e., at least 50%) should be Indian nationals, and the Chairperson of the board should be an Indian national resident in India. Therefore, only statement 2 is correct. RBI permits foreign banks to operate in India through branches or by setting up Wholly Owned Subsidiaries (WOS). The WOS model is generally preferred by RBI as it provides greater regulatory oversight and ring-fences the Indian operations from potential problems faced by the parent entity abroad. Specific guidelines are in place for WOS regarding capital requirements, governance, priority sector lending, and branching.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2025-06-01T11:15:21+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"With reference to the rule\/rules imposed by the Reserve Bank of India","description":"The question concerns the rules imposed by the Reserve Bank of India (RBI) on foreign banks setting up operations in India, specifically regarding Wholly Owned Subsidiaries (WOS). Let's evaluate the statements: Statement 1: \"There is no minimum capital requirement for wholly owned banking subsidiaries in India.\" This statement is incorrect. RBI guidelines require foreign banks operating as WOS in India to maintain a minimum initial assigned capital (net worth) of \u20b9500 crore. Statement 2: \"For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.\" This statement is correct. RBI guidelines for WOS stipulate that a majority of the board members (i.e., at least 50%) should be Indian nationals, and the Chairperson of the board should be an Indian national resident in India. Therefore, only statement 2 is correct. RBI permits foreign banks to operate in India through branches or by setting up Wholly Owned Subsidiaries (WOS). The WOS model is generally preferred by RBI as it provides greater regulatory oversight and ring-fences the Indian operations from potential problems faced by the parent entity abroad. Specific guidelines are in place for WOS regarding capital requirements, governance, priority sector lending, and branching.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india\/","og_locale":"en_US","og_type":"article","og_title":"With reference to the rule\/rules imposed by the Reserve Bank of India","og_description":"The question concerns the rules imposed by the Reserve Bank of India (RBI) on foreign banks setting up operations in India, specifically regarding Wholly Owned Subsidiaries (WOS). Let's evaluate the statements: Statement 1: \"There is no minimum capital requirement for wholly owned banking subsidiaries in India.\" This statement is incorrect. RBI guidelines require foreign banks operating as WOS in India to maintain a minimum initial assigned capital (net worth) of \u20b9500 crore. Statement 2: \"For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.\" This statement is correct. RBI guidelines for WOS stipulate that a majority of the board members (i.e., at least 50%) should be Indian nationals, and the Chairperson of the board should be an Indian national resident in India. Therefore, only statement 2 is correct. RBI permits foreign banks to operate in India through branches or by setting up Wholly Owned Subsidiaries (WOS). The WOS model is generally preferred by RBI as it provides greater regulatory oversight and ring-fences the Indian operations from potential problems faced by the parent entity abroad. Specific guidelines are in place for WOS regarding capital requirements, governance, priority sector lending, and branching.","og_url":"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2025-06-01T11:15:21+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india\/","url":"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india\/","name":"With reference to the rule\/rules imposed by the Reserve Bank of India","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2025-06-01T11:15:21+00:00","dateModified":"2025-06-01T11:15:21+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"description":"The question concerns the rules imposed by the Reserve Bank of India (RBI) on foreign banks setting up operations in India, specifically regarding Wholly Owned Subsidiaries (WOS). Let's evaluate the statements: Statement 1: \"There is no minimum capital requirement for wholly owned banking subsidiaries in India.\" This statement is incorrect. RBI guidelines require foreign banks operating as WOS in India to maintain a minimum initial assigned capital (net worth) of \u20b9500 crore. Statement 2: \"For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.\" This statement is correct. RBI guidelines for WOS stipulate that a majority of the board members (i.e., at least 50%) should be Indian nationals, and the Chairperson of the board should be an Indian national resident in India. Therefore, only statement 2 is correct. RBI permits foreign banks to operate in India through branches or by setting up Wholly Owned Subsidiaries (WOS). The WOS model is generally preferred by RBI as it provides greater regulatory oversight and ring-fences the Indian operations from potential problems faced by the parent entity abroad. Specific guidelines are in place for WOS regarding capital requirements, governance, priority sector lending, and branching.","breadcrumb":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/exam.pscnotes.com\/mcq\/with-reference-to-the-rule-rules-imposed-by-the-reserve-bank-of-india\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/exam.pscnotes.com\/mcq\/"},{"@type":"ListItem","position":2,"name":"UPSC IAS","item":"https:\/\/exam.pscnotes.com\/mcq\/category\/upsc-ias\/"},{"@type":"ListItem","position":3,"name":"With reference to the rule\/rules imposed by the Reserve Bank of India"}]},{"@type":"WebSite","@id":"https:\/\/exam.pscnotes.com\/mcq\/#website","url":"https:\/\/exam.pscnotes.com\/mcq\/","name":"MCQ and Quiz for Exams","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/exam.pscnotes.com\/mcq\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209","name":"rawan239","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/761a7274f9cce048fa5b921221e7934820d74514df93ef195a9d22af0c1c9001?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/761a7274f9cce048fa5b921221e7934820d74514df93ef195a9d22af0c1c9001?s=96&d=mm&r=g","caption":"rawan239"},"sameAs":["https:\/\/exam.pscnotes.com"],"url":"https:\/\/exam.pscnotes.com\/mcq\/author\/rawan239\/"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts\/92124","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/comments?post=92124"}],"version-history":[{"count":0,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts\/92124\/revisions"}],"wp:attachment":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/media?parent=92124"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/categories?post=92124"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/tags?post=92124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}