RBI as the Central Bank of India, issues Licenses for Commercial Banks to open branches. Can Foreign Banks open branches in India? If so, are there special conditions stipulated by RBI for licenses by a Foreign Bank ?

Foreign banks wishing to open a branch in India require a licence under the Banking Regulation Act, 1949. In some countries there is a requirement of multiple licences for dealing in local currency and foreign currencies with different categories of clientele. Like domestic banks foreign banks enjoy similar facilities to the payments and settlement systems and they are admitted as full members of clearing houses and payments system. Procedurally, foreign banks are required to apply to RBI for opening their branches in India. Foreign banks' application for opening their maiden branch is considered under the provisions of Section 22 of the Banking Regulation Act, 1949. Before granting any licence under this section, RBI may require to be satisfied that the Government or the law of the country in which it is incorporated does not discriminate in any way against banks from India. Other conditions as enumerated in section 2(5) of the Banking Regulation Act, 1949 are also required to be fulfilled. Unlike the restrictive practices of certain foreign countries, India is liberal in respect of the licensing and operation of the foreign bank branches. Unlike the restrictive practices of certain foreign countries, India is liberal in respect of the licensing and operation of the foreign bank branches as illustrated by the following: India issues a single class of banking licence to foreign banks and does not place any limitations on their operations. All banks can carry on both retail and wholesale banking. Deposit insurance cover is uniformly available to all foreign banks operating in India at a non-discriminatory rate of premium. The norms for capital adequacy, income recognition and asset classification are by and large the same. Other prudential norms such as exposure limits are the same as those applicable to Indian banks.