Foreign banks may get to tap PSU deposits

By agencies   |   Thursday, 03 November 2005, 20:30 IST
Printer Print Email Email
NEW DELHI: The government is considering permission for foreign banks to tap term deposits made by PSUs even as the U.S. and the European Union are pushing for enhanced market access for services in return for reduction in farm subsidies. As of now, foreign banks are not allowed to enter this key segment as PSUs put their surpluses only with Indian banks, a newspaper reported. Since foreign banks are keen to gain business from blue-chip PSUs like ONGC and IOC, the government is looking at this window as a bargaining chip to gain market access in other areas like agriculture. Therefore, it has been indicated to key trading partners that the bar on foreign banks from tapping PSU term deposits could be lifted gradually. According to current plans, empowering the RBI to allow foreign banks to accept such deposits could do this. The offer is part of India’s negotiating position at the WTO talks on services, the Economic Times said. The ‘concession’ would be granted only if trading partners come up with suitable offers to enhance India’s market access, highly placed government officials said. The government then issued instructions saying that PSUs can park their surplus funds only with banks incorporated in India. Therefore, both private sector as well as PSU banks is in a position to tap such funds while foreign banks are looking at this window, the paper said.