Breaking: Govt allows Foreign Banks to open new Offices in India
The Inter-Departmental Committee (IDC), chaired by Financial Services Secretary M. Nagaraju, held a meeting today with representatives from the Ministry of Home Affairs, Ministry of External Affairs, Department of Commerce and the Reserve Bank of India. The Committee discussed proposals submitted by the RBI regarding the opening of new branches, representative offices and subsidiaries of foreign banks wishing to operate in India.
It also reviewed applications from Indian banks seeking to expand their footprint abroad through similar arrangements. In addition, the IDC examined requests from foreign banks seeking permission to relocate their existing branches within the country. After carefully evaluating all proposals, the Committee recommended them for approval.
The IDC functions under the Department of Financial Services, which serves as the nodal agency for assessing such proposals. Before making any recommendations, the Committee consults with all participating ministries to ensure a coordinated, well-informed and consensus-based decision-making process.
The Government of India is also considering increasing the limit on foreign direct investment in state-run banks to as much as 49%, more than double the current ceiling of 20%. The finance ministry has been in talks with the Reserve Bank of India (RBI) over the proposal for the past two months. As per sources, the move is aimed at narrowing the regulatory gap with private banks, where foreign ownership of up to 74% is permitted. Recently, Foreign interest in India’s banking sector has risen sharply. Emirates NBD recently invested $3 billion deal to acquire 60% of RBL Bank and Sumitomo Mitsui Banking Corp invested $1.6 billion in Yes Bank.
