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Banking license: RBI, Finmin differ on foreign shareholding

The RBI and the finance ministry have differed on the issue of foreign shareholding for new bank licenses and the difference of opinion will delay finalisation of the guidelines, reports CNBC-TV18 quoting sources.

May 06, 2011 / 23:16 IST
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Even as the finance ministry and the RBI are discussing the draft guidelines for banking licenses, they hold differing opinions on the foreign shareholding that should be permitted in new banks. Thus, it seems that the process of finalisation of the draft guidelines will be delayed unless both parties come to an agreement on the foreign shareholding issue, reports CNBC-TV18's
Aakanksha Sethi quoting sources.

The central bank feels that foreign equity for new banks should be reduced to 49% in a bid to create strong domestic banking entities. However, the finance ministry wants higher foreign shareholding cap of 74% in order to maintain continuity of the existing policy. Current aggregate foreign investment in banks is capped at 74%, which includes foreign investment via sources like FDI, FII and NRI investments. Also watch the accompanying video Post RBI policy: Banks get into rate hike mode
 
TAGS: #CNBC-TV18 Comments #Finance Ministry #foreign investment #foreign shareholding #new bank license guidelines #RBI #rbi bank license guidelines #Reserve Bank of India
first published: May 6, 2011 03:45 pm

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