Foreign banks operating in India want the Reserve Bank of India [Get Quote] to prepare a vision document on policy changes they can expect after March 2009.

The foreign banks would list their demands in a "white paper" that would be submitted to the RBI soon, under the aegis of the Indian Banks' Association.

Citibank's India head Sanjay Nayar heads the standing committee of foreign banks at IBA, which has prepared a draft white paper. The paper will be finalised at the committee's meeting later this month.

The members of the committee are India heads of HSBC, Standard Chartered, Deutsche Bank, BNP Paribas, ABN Amro Bank, Bank of America, American Express, DBS Bank, JP Morgan, Barclays and Calyon. The foreign banks say a vision document by the RBI would help them prepare and plan for the future.

The central bank, in its roadmap for foreign banks in India, had suggested that it would liberalise the banking sector after March 2009.

The roadmap had also stated that the RBI would consider treating the wholly-owned subsidiaries of foreign banks in India in a similar manner as Indian banks, with a stipulation to list on Indian exchanges.

"We are just giving our views. It is up to the RBI to accept or reject them. The draft paper would detail issues concerning capital-raising options for foreign banks in India and their branch expansion, among others. The white paper looks at the roadmap for foreign banks post-2009. It expresses an opinion on how the banking sector should be, post 2009," said a banking source.

The decision of the foreign banks to submit a white paper to the RBI assumes significance as it comes after the recent comments by RBI deputy governor V Leeladhar on how the Indian regulatory regime for foreign banks was very liberal by global standards.

Leeladhar had said the Indian regulatory regime was much more equitable and provided a far more level-playing field to foreign banks than many other jurisdictions, both developed and emerging economies. He also complained about the lack of reciprocity from regulators of other countries.

A senior executive with a foreign bank, said: "The year 2009 is an election year and foreign banks are of the view that any change in government can affect the policy stance in the country. Since the RBI is an independent body, it would be nice if it could spell out a guidance note on the policy changes in advance. This will enable us to draw up India plans."

Branch expansion continues to be a major point of contention between the foreign banks and the regulator.

"The RBI has been issuing fresh branch licenses largely in the rural (under-banked) centres. There has to be some parity. There has to be a mix of rural and urban or semi-urban centres. You cannot expect a bank to open branches only in the rural centres. Capital raising and auditing of branches are some other issues which would be raised through the white paper," said another foreign banker.