India allows European Union banks to open 15 branches in four years

India will allow EU banks to open up to 15 branches over four years under the trade pact, while Indian banks will face no such cap in the EU

India has allowed the European Union (EU) banks to open up to 15 branches over four years in the country once the trade pact takes effect, while Indian banks will face no cap on branch openings in the EU, a commerce ministry official said.

 

India made a similar offer in its trade agreement with New Zealand, permitting up to 15 branches for New Zealand banks over a four-year period.

 

However, India has not opened up its legal services to the EU, the official said.

 

Under the services chapter, the EU has opened up 144 sub-sectors, including financial services, and India 102 sub-sectors to accommodate each other's priorities.

 

Currently, EU banks such as Deutsche Bank (Germany), BNP Paribas (France) and Société Générale (France) have significant presence in India.

 

Besides the trade deal, the Reserve Bank of India (RBI) and the European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, signed a Memorandum of Understanding (MoU) on Tuesday to facilitate cooperation and exchange of information for the recognition of central counterparties (CCPs) established in India and supervised by RBI.

 

“This agreement marks a significant step towards restoring access for EU clearing members to Indian central counterparties and follows two years of sustained engagement between ESMA and RBI. It reflects ESMA’s strong commitment to international supervisory cooperation and mutual support to advance safe, resilient and open financial markets,” ESMA said in a statement.

 

The MoU is a key requirement under Article 25 of the European Market Infrastructure Regulation (EMIR) for the recognition by ESMA of third-country CCPs. It allows the Clearing Corporation of India Ltd (CCIL), a CCP established in India and supervised by RBI, to re-apply for recognition under EMIR.

 

“ESMA is also continuing discussions with the Securities and Exchange Board of India and the International Financial Services Centres Authority (IFSCA) to conclude similar cooperation arrangements,” ESMA said in a statement.

 

The agreement is expected to double EU exports to India. Additionally, enhanced access to the Indian services market, particularly in financial services, maritime services, and other key sectors, will open new business opportunities and foster job creation.