DBS seeks RBI nod to set up local subsidiary

The Singaporean lender DBS on Tuesday became the first foreign bank to seek the Reserve Bank's permission to set up a local subsidiary.

"We have applied for Reserve Bank permission to bring our branches under a locally registered subsidiary," DBS group chief executive and managing director Piyush Gupta said in Mumbai.

Last year, RBI had made it mandatory for all foreign lenders with over 20 branches to gradually go the wholly owned subsidiary route, and those coming after August last year to do so immediately.

Since the new rules were issued, only Doha Bank entered the country last month and the existing rule applies only to three overseas lenders such as StanChart, HSBC and Citi, which have over 50 branches each now.

Currently, DBS has 12 branches.

The central bank has been goading overseas lenders to adopt the subsidiarisation route as it believes that such a model can give it better control over them, as in the branch model, anything happening to the parent can also cripple the system back here.