The Reserve Bank is likely to make it mandatory for foreign banks in the country to operate as wholly-owned subsidiaries, in line with the international practice, so that the central bank can have better control over their working. Initially, according to sources, the new banks and the existing ones with a few branches will be asked to convert into wholly-owned subsidiaries (WoS).

The larger banks, they said, could be given some more time to adhere to the guidelines that are likely to be announced by June-end.

At present, the foreign banks operate through their branches. Under the WOS model, the foreign banks will be required to set up a subsidiary under the Companies Act and operate as an Indian entity.

Sources said that in several countries, including the US and Singapore, it is mandatory for banks to operate as WOS.

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