The Reserve Bank of India (RBI) has received applications from four foreign banks to set up wholly-owned subsidiaries in India.
RBI deputy governor R. Gandhi said, "Discussions are going on, and I think four have already applied, and we are processing their applications."
However, he did not disclose the names of the foreign banks that have filed applications.
In November 2013, the RBI introduced a new policy, which ensured foreign banks tax and stamp duty benefits, and near-total national treatments if they converted their India branches into subsidiaries.
The new rules also mandate foreign lenders with 20 or more branches to set up local subsidiaries over the next few years.
Foreign lenders will however, not become a part of the newly licensed payments banks or the small banks, which are due to receive in-principle licences, Gandhi clarified.
So far, only Singapore’s DBS Bank and SBM Bank (Mauritius) have sought the approval of the central bank to convert their branches into subsidiaries.
In addition, Gandhi said that RBI would release the names of systematically important banks within two-three days.
The banks will need to maintain a slightly higher capital adequacy ratio based on their exposure to sensitive sectors and whether their operations are consolidated in a specific sector. The move, a first for India, will be carried out every August.