Foreign lender DBS Bank has commenced the process with the Reserve Bank of India to become a wholly-owned subsidiary (WOS) in India. A source confirmed that the process is underway.

With this, DBS India becomes the first foreign bank to set up a subsidiary in India, over a year after the RBI released the framework to allow foreign banks to set up subsidiaries here.

DBS India was also the first foreign lender to publicly announce its willingness to switch to the subsidiary model immediately after RBI’s announcement in November 2013.

“The implications of the move will be big for DBS in India helping it increase its local presence, especially in the retail segment,” the source added.

In November last year, Vijit Yadav, Managing Director and Chief Operating Officer at DBS had said the bank was in its planning and internal approvals stage for the wholly-owned subsidiary.

Following the global financial crisis of 2009, RBI wanted foreign lenders to switch to the WOS model to insulate the locally incorporated entity from impact in any other market.

The RBI framework was meant for large foreign banks with over 20 branches to convert into wholly-owned subsidiaries. It had set a cut off period of August 2010. Accordingly, banks entering the country after this date would have to move to the WOS model.

DBS entered India in 1994 and set up its first branch a year later. Last December, RBI Governor Raghuram Rajan, had said, “One of the biggest concerns the foreign banks have is the priority sector norms.... Even the government asked us to look at it. We are reviewing the same with the Finance Ministry… Once we get a consensus on the new norms, we will push for the WOS.”

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