Indian banks' UK arms seen getting hit by BoE's new norms

After a consultation launched in February this year, the Bank of England has set out stringent limits for branches of foreign banks operating in the United Kingdom. Several Indian banks will feel the impact of these changes, reports CNBC-TV18’s Sanjay Suri.A 100 million pounds cap on retail lending, strict new oversight and guarantees by parent banks are some of the restrictions Indian banks now face.The fundamental risk that the Bank of England is trying to cover is that such branches lack research into market trends in relation to their lending and their risk assessments are not up to pace with fluctuations in the market.The bigger banks of course hardly have a track record of great decisions based on great research as we have seen. Subsidiaries such ICICI or Axis Bank or Punjab National Bank that already work under more strict local regulations will not be affected.The new rules are likely to impact Bank of India, Bank of Baroda and State Bank of India, these may have to cap or freeze lending unless the parent bank steps in with firm new guarantees. Certainly these banks will be taking a hard new look at the viability of their operations under the new regulations.