With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements: 1. There is no minimum capital requirement for wholly owned banking subsidiaries in India. 2. For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals. Which of the statements given above is/are correct?
Explanation
Statement 1 is incorrect: Under the RBI's 2013 Scheme for Setting up of Wholly Owned Subsidiaries (WOS), a foreign bank must have a minimum paid-up voting equity capital of ₹500 crore (₹5 billion). The claim that there is "no minimum capital" is factually false.
Statement 2 is incorrect: This is the high-nuance part. The actual RBI rule states that not less than 50% of the directors should be Indian nationals/NRIs/PIOs. Because the statement in the question restricted the 50% requirement only to "Indian nationals," it excluded NRIs and PIOs, making the statement legally inaccurate. Furthermore, there is a separate sub-condition that at least one-third of the directors must be Indian nationals who are specifically resident in India.