While issuing a banking license for a foreign bank, RBI, in addition to usual consideration, takes into account

(a) whether the business will be carried by the company in public interest (b) whether the law of the country where the bank originated discriminates against Indian banks (c) whether the company complies with provisions of BR Act, as applicable to foreign companies

Procedurely, 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 Sec 22 of the BR Act, 1949. Before granting any licence under this section, the general character of the proposed management of the proposed bank will be in public interest or the interest of its depositors. 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.