Tax liabilities of foreign banks will rise marginally if the Reserve Bank makes it mandatory for them to conduct their operations in the country through wholly-owned subsidiaries (WOS) rather than a branch model, experts said today.

“Although the WOS model will provide greater control over the function of foreign banks in the country, the tax liability would rise slightly under the proposed structure,” said Diljeet Titus, a senior partner in law firm Titus and Co.

Titus was referring to an RBI discussion paper on the proposed new norms for permitting foreign banks to enter the country.

In the discussion paper, the RBI had suggested that foreign banks should be incentivised to operate in India as wholly-owned subsidiaries, as against the current system that allows them to have a presence under a branch model.

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