Finmin backs RBI on subsidiary model for foreign banks

The Finance Ministry has come out in support of the central bank's recent proposal to permit expansion of foreign banks in the country through the subsidiary model, as opposed to the current model of expansion through branches. It is also considering allowing capital gains tax waiver for such conversion. "We will be taking it up at the earliest and hope to set up norms for starting it soon," a senior finance ministry official said. The norms are expected to exempt such subsidiary firms from capital gains tax as well as allow them expansion in smaller cities of tier 3, 4, 5and 6.