Govt to soon resolve FDI norms in Indian banks

The issue concerning foreign ownership in Indian banks is currently under discussion among the finance ministry, commerce and industry ministry and the Reserve Bank of India (RBI) and is likely to be resolved soon.

“The matter is under active consultation and a final view to remove any ambiguity will be taken soon,” said Commerce and Industry minister Anand Sharma.

This comes in the wake of the government’s effort to make the foreign direct investment (FDI) rules investor-friendly after it faced widespread criticism by introducing the new Press Notes 2, 3 and 4 in February, which dealt with direct and indirect foreign investment in Indian companies.

Under the new norms, foreign capital inflows into a company, owned and controlled by resident Indians, or a company in which Indians have more than 50 per cent stake, will not be taken into account. But if non-resident entities hold majority stake in a company, then the entire investment in another company would be considered as indirect foreign investment.