- DBS was first foreign lender to seek RBI approval for the licence in 2014.
- It became the second bank after State Bank of Mauritius to receive the nod.
- Bank is confident of getting the final approval in 6-9 months.
Singaporean lender DBS on Monday said it has received in-principle approval from the Reserve Bank of India to convert its India operations into a wholly owned subsidiary.
DBS, the first foreign lender to seek RBI approval, had applied for the licence in 2014 to operate as a wholly owned subsidiary. The application has been pending with the finance ministry, which took time to grant approval due to the lack of precedent.
DBS is the second bank after State Bank of Mauritius to receive the nod.
Even though the approval provides for 12 months to get the final approval, the bank is confident of getting it in 6-9 months, Piyush Gupta, chief executive of the largest Singaporean bank, told reporters. He said the issue of capital gains tax has been sorted out and there will be no requirement for the bank to pay the levy.
In March this year, DBS India chief executive Surojit Shome had told PTI that the approval was delayed as the finance ministry was taking time. “A new category of banks has to be created...100 percent owned foreign banks do not exist. With the first bank licence, a new category of banks will get created. It is still a new thing,” Shome had said.
Also Read: Application For Wholly Owned Subsidiary In India Still Pending With Finance Ministry: DBS
DBS India has over 12 branches now with over 1 million customers.
Since the 2008 global credit crisis, the RBI had been insisting that large foreign banks should convert their operations into wholly owned subsidiaries in the country to insulate the local operations from any difficulties which the parent may face in their home market.
The guidelines were issued in late 2014 and DBS was the first to apply, followed by at least two others the Dutch lender ABN Amro and State Bank of Mauritius.
In November 2013, the RBI had come out with a new policy incentivising WOS and also ensured changes in laws, including tax and stamp duty benefits and near-total national treatments, but none of the lenders fell in line so far.
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