The largest Singaporean lender DBS today became the first bank to seek the regulatory nod to operate as wholly-owned subsidiary (WOS) in the country.
The Reserve Bank has been prodding foreign banks for long to get incorporated locally.
"A couple of weeks ago we put in an application with the Reserve Bank to apply for WOS here. We are hopeful that the application will be approved in due course and completes the transition by next March," DBS Group chief executive Piyush Gupta told reporters here this evening.
Operating as a WOS is favoured by the RBI as it helps ring-fence the local unit from any pressures which its parent may face in its home market or in its other international operations, and the demand for getting them incorporated locally have been on ever since the 2008 global credit crisis.
There are close to 100 foreign lenders operating in the country at present and all of them operate through branches or as representative offices.
In November 2013, the RBI came out with a new policy incentivising WOS and also ensured changes in laws, including tax and stamp duty benefits, but none of the lenders fell in line so far.
"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," Governor Raghuram Rajan had said while issuing the new subsidiarisation norms.
Under the new RBI rules, those foreign lenders with 20 or more branches have to mandatory get local subsidiaries over the next few years.
Currently, only two British lenders -- Standard Chartered and HSBC -- and the American lender Citigroup have over 50 branches each and fall under the mandatory WOS route.
But those entering the country after August 2010 will have to follow the new norms.
Since the RBI started calling for WOS route, only three large banks entered the country - ICBC of China in 2012, FirstRand Bank of South Africa in 2013 and Doha Bank last month.
All these banks had said they would not mind going the WOS route as and when demanded.
DBS, which is among the world's top 50 banks by size and the largest in the island city-state, was the only bank which had gone public with its intention of operating as a WOS. DBS India employs around 900 employees at present.
Gupta today said it was the release of the revised priority sector lending norms that was the clincher in it moving in with its application.
