From : E-Group, STC, Salt Lake, Kolkata This message is intended only for the use of the Addressee and may contain information that is PRIVILEGED and CONFIDENTIAL. If you are not the intended recipient, dissemination of this communication is prohibited. If you have received this communication in error, please erase all copies of the message and its attachments and kindly arrange to notify stcsaltlake@xxxxxxxx immediately. Using Internet Explorer in ATM PC of your branch, please browse http://10.128.74.200 (our Intranet Web-Site). We have provided lots of Reading Materials for you at the site. Happy browsing! Dear Member, Kindly double click on the enclosed attachment to read it. With regards, Anup Sen, Moderator E-Group, STC, Salt Lake, Kolkata email : stcsaltlake@xxxxxxxx We shall be glad to receive your feedbacks through emails regarding the mails being sent to you through this e-group.Title: State Bank of India, Staff Training Centre, Salt Lake, Kolkata. : : stcsaltlake@xxxxxxxx : :
MUMBAI, MAY 5: The fine print with reference to foreign banks opting for the
subsidiary route is being given final shape with Reserve Bank (RBI) suggesting
to the finance ministry (FinMin) that such arms will have to be capitalised at
a minimum level of Rs 300 crore. Several
foreign banks have held back from going ahead with their local ambitions due to
lack of regulatory clarity. Once notified, these regulations will catalyse
mergers and acquisitions in the private banking sphere as in a single fell
swoop, foreign banks intending to operate via this route will be bought on a
par with the latest capital requirements of round two new generation private
sector banks. According to extant RBI guidelines, this is initially Rs 200
crore with a commitment to increase the same to Rs 300 crore within three
years. The last to receive RBI?s private banking licences were Kotak Mahindra
Bank and Yes Bank. An RBI note to FinMin says: ?The minimum
capital requirement for setting up a subsidiary by a foreign bank will be Rs
300 crore. Current policies and procedures with regard to the establishment of
a branch would be applicable for the formation of a subsidiary. The current
policies in regard to branch expansion, priority sector lending applicable to
foreign bank branches would be applicable to foreign bank subsidiaries?. While RBI has already declared that a foreign
bank can operate in India either as a branch of the parent or through a
wholly-owned subsidiary or through a subsidiary with foreign investment up to
74 per cent, the RBI proposal has it that the limit of 74 per cent on foreign
equity would be reckoned by taking both direct and indirect holding. This, foreign bank sources said, can
lead to complications. For the definition of aggregate foreign investment ?
direct and indirect ? includes foreign direct investment, foreign institutional
investment (FII) and non-resident Indian holdings. In several banks, there are
substantial holdings by FIIs, and this, technically, reduces the room available
for fresh FDI inflows. Critical is also the suggestion that a
foreign bank having an operational presence here would be permitted to make
investments in the equity capital of any other bank in the country only as a
FII and up to 10 per cent consistent with the RBI guidelines pertaining to
shareholding. Furthermore, any foreign bank operating in India through branch
or subsidiary having investments as FII in excess of 10 per cent in any other
bank in the country either by the parent or through the subsidiary would be
required to indicate a time-bound plan for reduction in such investments to the
permissible limit. |
