RBI Clears Emirates NBD’s Subsidiary Plan in India
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Global Business Magazine- 4 minutes read
Emirates NBD Bank, the second largest lender in Dubai, on Tuesday said that it has received an in-principle approval from Reserve Bank of India (RBI) for establishing a Wholly Owned Subsidiary (WOS) in India, under the scheme for setting up of WOS under Section 22 (1) of the Banking Regulation Act, 1949 by foreign banks in India.
Emirates NBD is currently licensed to operate in India as a foreign bank under the branch mode and operates in the country via three branches in Mumbai, Gurugram & Chennai.
The proposed WOS set-up will complement Emirates NBD’s existing presence in India and enable Emirates NBD to further expand its presence in the country, the bank said in a disclosure with Dubai Financial Market (DFM) in the morning.
Vice Chairman and Managing Director of Emirates NBD Hesham Abdulla Al Qassim said that India is a key strategic market for the bank, and the in-principle approval is a positive step towards strengthening their position in the country.
This development further underscores our commitment to the long-term potential of the UAE-India corridor, he added.
Welcoming the RBI decision, Emirates NBD Group CEO Shayne Nelson said that they were looking forward to further increase their presence in the country to enable them to enhance service offerings and client relationships in India, in line with the Emirates NBD’s international growth strategy.
Emirates NBD will now work with various regulators and authorities in setting up a WOS, through conversion of its existing branches in India. Interestingly, Emirates NBD is carrying out banking operations in India in branch mode.
Licence Too
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. The issuance of this licence will be subject to the bank complying with the RBI’s requisite conditions. Emirates NBD Bank has been operating in India since November 2017.
RBI said that Emirates NBD Bank PJSC has fulfilled the regulatory mandates for receiving the approval and the subsidiary model ensures better regulatory oversight.
To start a wholly-owned unit (100% subsidiary) in India, the bank needs at least $351 million crore as starting capital. It also has to maintain enough capital to cover risks, which means a safety cushion of 10%.
The bank’s parent company in Dubai can own the entire Indian business for a minimum period set by the rules. The RBI also said that only those foreign banks can open fully-owned branches in India if their home country keeps a close check on how they operate.
