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49% FDI in bank would include FII investments also

The government on Thursday clarified that the 49 per cent foreign direct investment for banks would include investments by foreign institutional investors also.

Banking secretary Devi Dayal told reporters that a clarification in this regard would be issued soon.

The Cabinet on Wednesday approved 49 per cent foreign direct investment in the banking sector on an automatic route but subject to the guidelines of the Reserve Bank of India.

Earlier non-resident Indians were allowed to invest up to 40 per cent of the investment in the banking sector and there was a cap on the FDI up to 20 per cent.

Now FDI from all sources, either in the combination of FDI and investment from NRIs or only FDI, is allowed up to 49 per cent.

The government also decided that all investment made by NRIs in India in foreign exchange component would be fully repatriable in foreign exchange.

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