Union Commerce and Industry Minister Anand Sharma on Monday ruled out making any changes in the foreign direct investment (FDI) norms for private banks, asserting that the present rules were doing well.
Ownership dilemma
Talking to media persons on the sidelines of a conference organised by the Associated Chambers of Commerce and Industry of India here, Mr. Sharma said the new FDI policy ‘is doing very well,' indicating that private sector banks like ICICI Bank and HDFC Bank would be treated as foreign entities as majority of their ownership lies with overseas investors.
“As of now, the policy, which is there, is doing very well,'' he said. According to the Press Notes 2, 3 and 4 of the Department of Industrial Policy and Promotion, for a company or entity to be treated as Indian, foreign investment, including American and global depository receipts, foreign currency convertible bonds, convertible preference shares and from non-resident Indians, in it should be less than 50 per cent.
While the control in as many as seven private banks is with the Indians, their foreign ownership is above 50 per cent, thus making them ineligible for being termed as domestic entities. “Yes there are some banks and the talks have been there between the Reserve Bank of India, the Finance Ministry and the Commerce and Industry Ministry. But as of now, the policy which is there is doing very well,'' Mr. Sharma said.
ASEAN FTA
Meanwhile, Mr. Sharma said further negotiations would be held soon between India and ASEAN for opening trade in services, an area of immense interest to Indian professionals.
Officials from India and ASEAN would resume their talks to widen of the scope of a free trade agreement (FTA) with the 10-nation trading bloc to cover services and investment.
“The second round of negotiations is soon going to begin,'' Mr. Sharma said. The two sides are hoping to conclude the negotiations by August.
The country is looking at expanding trade with ASEAN in several services, including banking, insurance, health, accountancy, architecture and engineering.
The two sides aim to increase their $44 billion trade to $50 billion by the end of 2010.
