Official Answer Key & Detailed Solution
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Correct Answer: Option (D) — Neither 1 nor 2
Concept & Option Breakdown
Standard Reference VerifiedStatement 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.
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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