The Reserve Bank of India (RBI) said on Monday that it has decided to grant in-principle approval to the UAE’s Emirates NBD Bank PJSC for setting up a wholly-owned subsidiary in India. Emirates NBD Bank PJSC is Dubai’s government-owned lender. The Indian central bank’s nod is under its scheme for setting up wholly-owned subsidiaries by foreign banks in the country.
RBI gives in-principle approval to Emirates NBD Bank PJSC: What next?
Here are 10 things to know about this development:
- The development comes at a time when Emirates NBD Bank PJSC is carrying out banking operations in India in branch mode. Currently, the UAE-based lender has its branches located in Chennai, Gurugram and Mumbai in India.
- The bank is based in Dubai and is the second-largest bank in the UAE.
- The in-principle clearance will enable to Dubai-based lender to to establish the subsidiary by converting its existing branches in India.
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The RBI will now consider granting a licence to the UAE-based lender to enable it to commence banking business in wholly-owned subsidiary mode under Section 22 (1) of the Banking Regulation Act, 1949.
- The issuance of this licence will be subject to the bank complying with the RBI’s requisite conditions, according to the central bank.
- The bank has been operating in India since November 2017.
- To start a wholly-owned unit (100 per cent subsidiary) in India, the bank needs at least Rs 300 crore as starting capital.
- It also has to maintain enough capital to cover risks, which means a safety cushion of 10 per cent.
- The bank’s parent company in Dubai can own the entire Indian business for a minimum period set by the rules.
- The RBI also says that only those foreign banks can open fully-owned branches in India if their home country keeps a close check on how they operate.
