18 foreign banks keen to set shop in India

The Reserve Bank is processing applications of 18 foreign banks, which have shown interest in setting up branches and representative offices in the country, Parliament was informed on Tuesday.

"As on date, applications by RBI from 18 foreign banks for opening maiden branch/representative office are under various stages of progress", Minister of State for Finance Namo Narain Meena said in a written reply to the Rajya Sabha.

"As on June 30, 2010", Meena said, "more than 300 foreign bank branches are present in the country."

Responding to a query on whether allowing foreign banks setting up base in India would effect domestic banks, he said the RBI was preparing a discussion paper on the impact and would take some time before coming up with the final recommendations on granting new licences to banks.

"As the global financial markets started to improve ...it was announced in the RBI Annual Policy Statement 2010-11... to prepare a discussion paper on the mode of presence of foreign banks through branch or wholly-owned subsidiary by September 2010", Meena said.

When asked whether the RBI had decided to review the status of financial sector to see if it was ready for further liberalisation, Meena said that the system needed to grow in size and sophistication.

He said that besides this, there was a need to extend the geographic coverage of banks and improve access to banking services.

"In this context, it was announced that the RBI would be considering giving some additional licences to private sector players including non-banking financial companies, if they met the RBI's eligibility criteria", he added.