Indian banks to benefit from relaxed FDI policy

Author: | Published: 22 Jul 2011

India’s bankers' counsel have welcomed government plans to liberalise the country’s foreign direct investment (FDI) policy.

India’s department of Industrial Policy & Promotion (DIPP) last month invited market input on the effectiveness of limits imposed on foreign ownership of equity capital in sectors such as insurance, telecommunications and retail.

In a discussion paper released on June 23, the DIPP questioned the relevance and necessity of equity caps below 49%. It debated control of effected businesses by foreign corporations and suggested Indian control could be maintained through conditions prescribed per sector, including lock-in periods and minimum investment requirements, in the place of equity caps.

Kotak Mahindra Capital’s chief legal and compliance officer, Ajay Vaidya told IFLR the move had been prompted by diminishing FDI flows into India. "There is potential for huge...