Experts stress on the need for foreign banks that operate in India to convert themselves into wholly-owned subsidiaries instead of functioning as branches of their parent company.

This is because conversion into wholly-owned subsidiaries lead to their incorporation according to local norms.

This would enable Reserve Bank of India (RBI) to act independently against the branch operations. The wholly-owned subsidiary model makes it easier to define the appropriate law of jurisdiction.

It is learnt that the central bank would soon publish final WOS guidelines for international banks in India.

At present, the foreign bank branches are free to increase their lending capacity based on the parent bank's capital.

At present, the granting of bank branch licences to international banks is governed by a commitment to the World Trade Organisation (WTO) to grant 12 licences per annum although, in practice, a higher number have been granted according to merit. Should the regulator adhere to the WTO limit, the implications for international banks are substantial.