India is a vast country with a lot of trade opportunities. Banks had a major contribution in India’s growth. Foreign banks, speaking about them as a definition, they are banks from a foreign country working in India through branches. RBI has provided rules and guidelines for a foreign bank to establish and operate in India.
Recommended Read : List of Foreign Banks - Published by Reserve Bank of India
Eligibility Criteria - Foreign Banks in India
There is an eligibility criterion on the basis of capital for the foreign bank to work in India. They must have at least 5 billion rupees towards capital on establishment. Moreover they must also be ready to credit 18 % of net ANBC (‘adjusted net bank credit’ – which is total investment made by bank on non-governmental securities.) towards agricultural loans.
Modes of Operation
The banks can have two modes of operation in India. As mentioned above branch mode or Subsidiary mode which is known as WOS (Wholly owned Subsidiary). They can either start the bank branches in the initial setup or later convert them to WOS. But to work as a WOS there are several factors to be met
- Economic stability should be proved by the bank
- Bank must have a very good financial soundness
- The bank must provide necessary documents to show the proper ownership.
- The bank must be rated by any International rating agency
- Bank must have a risk management team.
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