RBI’s new guidelines on subsidiarisation of foreign banks are unlikely to alter the banking sector’s competitive landscape by itself, but does signal the prospect of further reforms, Fitch Ratings said. Wholly owned subsidiaries (WOS) of foreign banks will now have considerable freedom to open branches, list on Indian exchanges and participate in domestic M&As.
In theory, these ought to encourage the existing large foreign banks to deepen their business profiles in India, the global ratings agency said in a report. “But regulatory treatment, which is almost equivalent to that for domestic banks, will also create formidable challenges such as meeting priority sector lending (PSL) norms (40 per cent net bank credit) and maintaining at least 25 per cent of all new branches in unbanked centres,’’ it said...Read more >> Click here
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