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Britain urges India to lift FDI cap in banks

India needs to lift the ceiling on foreign investments in banks and expedite divestment of state-owned financial sector entities to attract higher overseas investment, Britain's chief secretary to treasury Paul Boateng said on Thursday.

Seeking a speedy liberalisation of the Indian financial sector, Boateng said "the challenge for the Indian government, the Reserve Bank of India and the industry here is to embrace the reality of increasingly integrated global markets and release the potential inherent in Indian banks, insurance companies and securities houses".

The General Agreement on Trade in Services negotiations under World Trade Organisation's Doha agenda would provide a framework for liberalisation, he said while addressing a Banking and finance summit", organised by Tata Consultancy Services in Mumbai.

Political, trade and investment links between the two countries are flourishing and "now is the time to take the next step (liberalise financial sector) to sustain high growth across the rest of the economy", he added.

"UK-based banks, fund managers and insurance sector players are eager to bring their international expertise to help take Indian market to the next stage," Boetang said.

As India strives to sustain eight per cent growth and reduce poverty ratio by 15 per cent by 2012, the way forward was through domestic reform to create the right climate for an international industry, Boetang said.

A more efficient industry drives growth across all other areas of the economy, thus lowering the cost of capital for business, he added.

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