Therefore, an article XXI procedure to withdraw the commitments is not foreseen.
c) Could India explain how the policies of allowing 100% or wholly owned subsidiaries of foreign banks relates to the 74% equity cap for foreign shareholding in any Indian bank and the proposed 49% equity cap for new banks. In this regard, could RBI explain:
How is a new Indian bank defined: would it cover subsidiaries of foreign banks both when converting from branch or when establishing anew, banks formed as a result of mergers or acquisitions, or only totally newly established banks?
Is it ensured that wholly owned subsidiaries will not be forced to divest 26% to comply with the equity cap?
Is it ensured that a new subsidiary of foreign bank will not be treated as a new bank, and hence the new proposed 49% equity cap applied for 5 years?
Reply:
The 74% equity cap for foreign shareholding is exclusively for private sector banks and not for foreign banks. A private sector bank would mean a banking company incorporated in India under the Companies Act 1956 and promoted by entities/groups that are owned and controlled by resident Indians.
As per the Discussion Paper on Presence of Foreign Banks in India, the issue of dilution or listing of WOS of foreign banks in India and allowing mergers and acquisitions of Indian private sector banks by foreign banks or their WOS may be considered after a review is made of experience gained on the functioning of WOS of foreign banks in India.
A final policy view on "Discussion Paper on Presence of Foreign Banks" is yet to be taken. Incidentally, 49% equity cap for five years for new banks has not been discussed in this discussion paper.
EU FQ 14:
14. Question 124 follow-up:
a) Could India confirm that foreign satellite operators are not allowed to sell directly to telecommunications operators?
b) Could India explain the reasons for not allowing resale of telecommunications services?
c) Without prejudice to the outcome of current reform, could India indicate, if the Government of India has proposed to change both of these issues in the ongoing discussions on the National Telecom Policy 2011?
