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RBI may ask new foreign banks to form subsidiaries in India

By Religare
RBI may ask new foreign banks to form subsidiaries in India
Reserve Bank of India (RBI) may ask the new foreign banks that have just entered India to adopt subsidiary model in the country instead of adopting a branch model, hoping to strike a level-playing field between domestic and foreign banks.

RBI governor D Subbarao said that the central bank has already resolved major taxation issues such as exception from stamp duty and capital gains tax on conversion from a branch to a subsidiary.

He said that however few other issues are yet to be resolved which will take some more time, after which RBI will issue final guidelines. Subbarao had planned mandatory incorporation of subsidiary foreign banks following the global financial crisis of 2008.

While all the foreign banks have so far chosen to operate in India in a branch mode, Subbarao plans to make it mandatory for new and existing foreign banks to work as a subsidiary in India.

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