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Question No. 138Interactive Test Mode
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Q138. With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements: 1. There is no minimum capital requirement for wholly owned banking subsidiaries in India. 2. For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals. Which of the statements given above is/are correct?

With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements:

  1. There is no minimum capital requirement for wholly owned banking subsidiaries in India.
  2. For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals. Which of the statements given above is/are correct?
Select the correct option below (or cross out options to eliminate)

Official Answer Key & Detailed Solution

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Official UPSC Answer KeyUPSC Prelims 2024 • Indian Economy

Correct Answer: Option (D) — Neither 1 nor 2

Concept & Option Breakdown

Standard Reference Verified

Statement 1 is incorrect: The Reserve Bank of India (RBI) mandates a minimum paid-up equity capital requirement of ₹500 crore for establishing a Wholly Owned Subsidiary (WOS) of a foreign bank in India to ensure adequate capitalization and financial stability. Statement 2 is incorrect: According to RBI guidelines for WOS of foreign banks, at least 50% of the directors must be Indian nationals, Non-Resident Indians (NRIs), or Persons of Indian Origin (PIOs), with at least one-third being Indian nationals resident in India. Thus, having strictly at least 50% Indian nationals is not mandatory.

Elimination Heuristic & Exam Approach

Extreme conditions like 'no minimum capital requirement' in banking regulation are almost always false, as regulatory prudential norms require capital cushions.

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Question Specifications & Syllabus Mapping

Examination & YearUPSC Civil Services Preliminary Examination 2024 (Q138)
Paper & Marking SchemeGS Paper I • 2 Marks (-0.66 Negative for incorrect response)
Syllabus Subject & TopicIndian Economy → Banking & Financial System
Official Answer KeyOption (D) — Neither 1 nor 2

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Frequently Asked Questions — UPSC Prelims 2024 Q138

What is the official answer for UPSC Prelims 2024 GS Paper I Question 138 (Indian Economy)?

The official UPSC answer key for this 2024 Indian Economy (Banking & Financial System) question is Option (D): "Neither 1 nor 2". Correct attempts carry 2 Marks with -0.66 Negative penalty for wrong answers.

Which UPSC Prelims syllabus topic does this 2024 question belong to?

This question belongs to GS Paper I under the subject "Indian Economy" and micro-topic "Banking & Financial System". You can explore all repeated questions from Banking & Financial System in Acme AI's 3D Prelims PYQ Realm or practice 50 full-length and sectional tests in the APT Prelims Test Series.

How can I solve this Banking & Financial System UPSC Prelims question using option elimination?

Extreme conditions like 'no minimum capital requirement' in banking regulation are almost always false, as regulatory prudential norms require capital cushions.

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