Capital Requirements & Shareholding for Foreign Banks in India: A Perspective

| Point de vue

The Indian and global economy are back on track after the financial crisis. What's next?

The Indian and global economy are back on track after the financial crisis. Now, in the aftermath, the Indian banking community needs to reconsider the structure of the financial sector for the immediate future.

Indian banks in general, have escaped the crisis. They were part of the highly regulated Indian environment and were hardly interwoven with the global financial economy in terms of the risk sharing, in the trillions of dollars of straight and derivative financial products.

The winds of change are transforming the global banking landscape with incredible speed. Indian banks will become more visible among their international counterparts. The Indian banking sector will grow and will also be able to offer services on par with global players, and most important will have an appropriate infrastructure to manage: growth, financial stability, resilience, vision and social commitments.

In order to achieve this, the Ministry of Finance (MOF), and the Reserve Bank of India (RBI) intend to strengthen the banking sector by requiring higher levels of capitalization, to effectively implement the Basel II and III norms, and to fuel competition by issuing new banking licenses to private and foreign banks in India.