 After more than a year, the Reserve Bank of India (RBI) has started offering new branch licences to foreign banks that have a large network of branches. Industry players say this indicates further delay in framing guidelines for the wholly-owned subsidiary model for foreign lenders in India.
The top seven foreign lenders in the country, which account for over 70 per cent of foreign bank branches, have not added a single branch to their network this year, though they had applied to RBI for new branch licences.
According to bankers, in the last few weeks, RBI offered new licences to Standard Chartered Bank and Deutsche Bank. With 94 branches, Standard Chartered has the largest network among foreign banks in India. The bank received three new licences and plans to open the branches next year. Deutsche Bank, which has 15 branches, has secured licences to open branches in Ahmedabad and Surat.
In January, RBI had released a discussion paper on the presence of foreign banks in India and had invited feedback from the public. Foreign banks had given their views to RBI in the first week of March.
Bankers said foreign lenders had asked RBI to sort issues related to capital gain tax, priority sector requirements and the branch licensing policy.
According to India's commitment to the World Trade Organisation, RBI had agreed to offer at least 12 branch licences to foreign banks every year. In the past, the central bank had allowed the opening of 17-18 foreign bank branches in a year. However, in last one to one and a half years, RBI had given branch licences to foreign banks that were foraying into India or had a limited number of branches.
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