Federal Reserve Board Chairman Paul Volcker has declined to reconsider the central bank's earlier approval for a Hong Kong banking firm to acquire control of one of the biggest financial institutions in this country.

Volcker's decision, revealed in a letter sent Monday to Rep. Benjamin Rosenthal (D-N.Y.) apparently means that the only remaining government action needed for Hongkong and Shanghai Banking Corp. to buy a 51 percent interest in Marine Midland Banks Inc., is a decision by the Comptroller of the Currency on switching Marine's charter from New York state to the federal banking system.

New York bank regulators have turned down the proposal by Hongkong and Shanghai to take over Marine Midland, the largest upstate bank in New York and 12th largest in the nation, citing inadequate financial data supplied by the Hong Kong firm.

The Federal Reserve Board, however, approved the acquisition last March 16 and Marine filed subsequently with the Comptroller's office to switch to a federal charter, so approval by New York state banking authorities no longer would be required.

In the letter to Rosenthal, who has denounced the proposed foreign takeover of a major American banking firm, Volcker said the acquisition bid has not changed in any "material respect" and there is "no evidence of error or irregularity in the original proceedings."

Responding yesterday, Rosenthal asserted that Volcker had failed "to address the substantive issues I have raised" and announced plans to hold hearings shortly on Federal Reserve administration of the Bank Holding Company Act as applied to foreign corporations such as Hongkong and Shanghai.

Rosenthal, chairman of the house subcommittee on commerce, consumer and monetary affairs, asked the Fed to reconsider its acquisition approval last December, citing alleged violations of statutory requirements -- particularly the extensive nonbanking business controlled by Hongkong and Shanghi that never would be permitted for a U.S. bank holding company.

"The law expressly prohibits the mixing of banking and commerce in U.S. holding companies, for good reason," Rosenthal said yesterday. "While an exception is permitted for foreign corporations under the law, the law requires the Federal Reserve to make a determination that this exception is in the public interest."

Rosenthal claimed that the central bank made no such formal decision.

Although the congressman is planning hearings on the issue, it is possible that the Marine Midland takeover will be moving forward in the near future.

Comptroller John Heimann said last year he expected to announce a decision before the end of 1979 and a ruling is expected shortly. Most sources expect his agency to approve the switch to a federal charter, paving the way for the Hongkong and Shanghai investment to be consummated.

"The whole thing is highly irregular procedurally, and a further congressional review of the Fed's actions in this case seems essential," Rosenthal said yesterday. "Moreover, the public-policy question of whether and why it is in the public interest for a major U.S. bank like Marine to become part of an international conglomerate like the Hongkong organization, when such a combination would be against the law in the U.S., needs to be thoroughly aired."

Rosenthal and other leading members of Congress have supported legislation that would ban new foreign takeovers of U.S. banks pending a Capitol Hill review of the issue. Foreign-owned banks now control a quarter of assets of banks in New York City; nationwide, foreign-owned banks' assets have jumped from $18 billion to about $95 billion between 1972 and 1979. U.S. bank assets exceed $1.2 trillion.

Marine Midland's assets exceed $12 billion and it holds 63 percent of the Buffalo area's bank deposits, where the firm is based. The bank also is a major institution in Elmira, Utica, Syracuse, Binghamton and Rochester. Under terms of a bid already approved by Midland stockholders, Hongkong and Shanghai would invest some $230 million in the company and pay $80 million for 25 percent of outstanding stock -- and eventually gain control of 51 percent of the stock.

In a Fed staff report accompanying Volcker's letter, the agency concluded that Hongkong and Shanghai's principal business was in banking based on a compilation of assets and profits.