Mumbai: The Reserve Bank on Monday said that it would review the roadmap with relation to the presence of foreign banks in the country once a greater clarity about the recovery of the global economic system was available.
The apex bank will “review the roadmap after due consultation with the stakeholders once there was greater clarity regarding stability and recovery of the global financial system,” the RBI said in its Report on Trend and Progress of Banking in India 2009-10, released in Mumbai.
During the first phase (2005-09), foreign banks willing to have a presence in India for the first time could either choose to operate through a branch or set up a wholly-owned subsidiary (WOS).
Foreign banks already in India were allowed to convert their existing branches to a WOS following the one-mode presence criterion, the RBI said.
The WOS was to be treated on par with existing branches of foreign banks for branch expansion in India. No foreign bank, however, applied to establish itself as a WOS or to convert to a WOS during the first phase.
When the revision of presence of foreign banks was due in April 2009, the global financial markets were in a turmoil.
“There were uncertainties surrounding the financial strength of banks around the world,” the RBI said.
Accordingly, in its annual policy statement of April 2009, the RBI indicated the intent to continue with its current policy and procedures governing the presence of foreign banks and to review the roadmap after clarity about the stability and recovery of the global financial system was received, it said.