India relaxes rules on foreign bank ownership

[MUMBAI] India's central bank has unveiled a far-reaching set of regulations to allow foreign banks into the country's long-protected domestic market. But it demanded that they do so through subsidiaries incorporated in India and said that eligibility would be limited to banks from countries that reciprocate by letting in Indian banks.

The regulatory framework issued after the close of trading on Wednesday requires that foreign banks invest a hefty minimum of 5 billion rupees (about S$99 million) in equity capital in each subsidiary.

The new rules also require separate boards for each subsidiary. Two-thirds of the directors must not be executives of the bank, and at least half of the directors must be Indian citizens.