Private bank might not be included in purview of the new FDI guidelines

Government directing towards RBI’s concern on the change of their status from 'resident' to 'foreign' if the norms are implemented there is possibility that private sector banks like ICICI bank, HDFC bank and Vysya Bank might not be included in the purview of the new FDI guidelines.

An official stated "There is a probability that we will exempt these banks from the guidelines on the lines of the exemptions in the insurance sector".

In February the of Industrial Policy and Promotion, through a string of 'Press notes' made changes in the FDI guidelines after which many private sector banks found that their status will get changed from ‘resident’ to ‘non-resident’.

There will be change in status because the total FDI will take into consideration the stakes held by Non-Resident Indians, American and global depository receipts, foreign currency convertible bonds and convertible preference shares.

Thus RBI raised the issue with the Finance Ministry and DIPP, in which it pointed out that as per the revised policy, foreign investment in all these banks will go beyond 50% in the new policy regime therefore they will be treated as non-resident entities.