With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the 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?

The correct option is 2 only.

Let us analyze the statements with reference to the rules imposed by the Reserve Bank of India (RBI) for Wholly Owned Subsidiaries (WOS) of foreign banks in India:

Statement 1 is incorrect: The RBI has set a strict minimum capital requirement for Wholly Owned Subsidiaries of foreign banks operating in India. A foreign bank establishing a WOS in India must have a minimum paid-up equity capital of Rs. 500 crore (5 billion INR). Therefore, the claim that there is no minimum capital requirement is false.

Statement 2 is correct: According to RBI guidelines for the setup of Wholly Owned Subsidiaries by foreign banks, at least 50% (half) of the board of directors of the WOS must be Indian nationals. This is to ensure local management representation and compliance with Indian regulatory and corporate governance norms.