Decision on local subsidiarisation soon: StanChart India Head

With the RBI nudging foreign banks to operate as wholly-owned subsidiaries here, the largest offshore lender by branch presence, Standard Chartered, today said it will come out with a final decision "pretty soon".
"We are reviewing it; there are various issues to (get converted into) a local arm norms, as well as home country. We will come up with a final decision pretty soon," Standard Chartered CEO (India and South Asia) Sunil Kaushal told reporters here on the sidelines of a banking summit.
"We are not running away from it," he added but refused to proffer a timeline.
The British bank, with nearly 100 branches, is the largest and the oldest foreign lender in the country and is also the only such bank listed on the domestic bourses through an Indian depository receipts (IDR) issue.

To ring-fence the country's financial system from any adverse developments in the large foreign lenders in their home market, the RBI since the 2008 credit crisis has been asking such lenders to adopt the wholly-owned subsidiaries route to operate in the country rather than working as branches of units registered overseas.
Towards this, the government and RBI have also resolved the tax and stamp duty issues that these lenders were demanding but last year the central bank had hiked extended the mandatory priority lending norms for foreign banks to 40 per cent as well.

Last November, RBI had released a framework for large foreign banks with over 20 branches to convert into wholly- owned subsidiaries and had set a cut off period of August 2010 under which those banks entering the country after this date would have to mandatorily become subsidiaries and not branches.

The framework said all foreign banks which move to a wholly-owned subsidiary route will be given near national treatment apart from capital gains tax and stamp duty benefits.
RBI Governor Raghuram Rajan had said he was for nudging these lenders to go as a WOS and also threatened them to fall in line, saying the RBI can be tough if they do not comply.
"...At some point in time if the carrot does not work, we may need to push a little harder, as some of the jurisdictions across the world have done," he had said.