The norms, released as a measure to liberalise foreign direct investment (FDI) flows into India, had resulted in seven Indian banks being labelled as foreign-owned and India- controlled entities, which severely restricted their existing downstream investments in sectors like insurance. The government has now decided to make an exception for the banking sector, a senior government official familiar with the development told FE. This means banks will not be governed by the new rules on FDI. The department of industrial policy and promotion (DIPP), the nodal agency for FDI policy, is soon expected to clarify the policy relaxation for banks. ...

More...