The Reserve Bank of India (RBI) said on Monday it had decided to grant principled approval to UAE Emirates NBD Bank PJSC for establishing a wholly owned subsidiary in India. Emirates NBD Bank PJSC is a lender owned by Dubai. The Indian Central Bank nods are under a scheme for establishing a wholly owned subsidiary by foreign banks in the country.
RBI approves the PJSC of NBD Bank to the Emirates: What’s next?
Here are 10 things you need to know about this development:
- This development occurs when Emirates NBD Bank PJSC is running banking operations in India in branch mode. Currently, the UAE-based lender has branches in Chennai, Gurugram and Mumbai, India.
- The bank is based in Dubai and is the second largest bank in the UAE.
- The principle clearance allows Dubai-based lenders to establish subsidiaries by converting existing branches in India.
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RBI will consider granting a license to a UAE-based lender, pursuant to section 22(1) of the Banking Regulation Act of 1949, to allow banking operations to be launched in a wholly owned subsidiary mode.
- According to the central bank, issuance of this license is subject to banks that comply with the required conditions of the RBI.
- The bank has been operating in India since November 2017.
- To start a wholly owned unit (100% subsidiary) in India, the bank needs at least 300 Rs as its initial capital.
- You also need to maintain sufficient capital to cover the risks. This means 10% safety cushion.
- The parent company of a Dubai bank can own the entire Indian business for the minimum period set by the regulations.
- The RBI also states that only foreign banks can open fully owned branches in India if they are closely checking how their home country operates.
