How many new branches can foreign banks open in India?

Foreign banks are now permitted to establish up to 15 branches over a four-year period.

What is the significance of India's new bank branch licensing framework?

This framework represents a significant liberalization, increasing the number of permitted branches for foreign banks and reflecting a forward-looking approach to financial sector development.

What role does the Inter-Departmental Committee play in foreign bank approvals?

The IDC evaluates proposals from foreign banks, consulting with other ministries to ensure security, political, and economic considerations are met before making recommendations.

Home / Business and Economy / India Opens Doors: Foreign Banks Gain Branching Power

India Opens Doors: Foreign Banks Gain Branching Power

2 Jan

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Summary

Foreign banks can now establish 15 branches over four years.
This marks a significant increase from previous WTO commitments.
India aims for progressive market opening in its financial sector.

India Opens Doors: Foreign Banks Gain Branching Power

India's financial sector is poised for significant liberalization, with a recent Inter-Departmental Committee recommendation to allow foreign banks to establish more branches. Under a new agreement, foreign banking institutions will be permitted to open up to 15 branches over a four-year timeframe, a notable increase from the 12 branches previously committed under the WTO's General Agreement on Trade in Services.

This decision was considered by the Inter-Departmental Committee (IDC), chaired by Department of Financial Services (DFS) Secretary M Nagaraju. The committee deliberates on proposals from the Reserve Bank of India (RBI) concerning foreign banks seeking to operate in India, consulting with member ministries for security, political, and economic input. The recent report, "Trend and Progress of Banking in India 2024-25," indicated a gradual contraction in foreign bank branches in recent years.