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FDI: Foreign banks crowd outside RBI
By siliconindia staff writer
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Wednesday, 08 September 2004, 19:30 IST
MUMBAI: Over the past couple of months, a host of foreign bank chiefs have been hotfooting it to India, as lobbying gains momentum for ensuring a liberal foreign investment regime for overseas banks here.
Although unstated, the recent visits of such top bank honchos to meet senior officials of the finance ministry and the Reserve Bank of India (RBI), seem to be aimed at building a strong case for allowing foreign banks greater leeway in the country, especially for setting up subsidiaries and acquisition of domestic private banks.
The reasons for pushing on are quite clear. Although some of the leading foreign banks had announced their intentions to acquire local private banks, RBI has threatened to pour cold water on such plans by suggesting severe restrictions on foreign direct investment (FDI) in private sector banks in its draft ownership norms.
The draft norms, unveiled a couple of months ago, had suggested that FDI by a single entity or a group of related entities should be capped at 10%. It also sought to place fetters on foreign banks which have a presence in India by seeking to restrict their equity stake in private banks to just 5%.
Now, as RBI is set to finalise the second draft ownership guidelines for private banks, after obtaining feedback from the banking sector, several global banking heavyweights have come calling on Mint Street (which houses RBI) and North Block (where the finance ministry is located). The calling cards left behind include those of a cream of foreign bankers.