New Delhi, Apr 22 (UNI) Finance Minister P Chidambaram today said it was wrong to say that there was a huge intrusion of foreign banks in India.
In a reply during the Question Hour in the Rajya Sabha, Mr Chidambaram said that keeping in view the size of the Indian economy, the amount of banking capital of foreign banks in the country was not a huge one.
He said that in an integrated and global system, some presence of foreign banks in the country was natural.
''Just as Indian banks are establishing branches abroad, foreign banks will also have to be allowed to open their branches in India,'' Mr Chidambaram said.
Stating that the guidelines prescribed for foreign banks were different from those prescribed for Indian banks, he said, ''the minimum capital requirements stipulated for the Reserve Bank of India (RBI) require a foreign bank opening a branch in India to bring in 25 million US Dollars as an assigned capital. Foreign banks are also required to maintain minimum capital funds amounting to not less than nine per cent of the Capital to Risk Weighed Assets ratio(CRAR) of its Indian operations.'' Further, the minimum capitalisation norms stipulated for setting up a 100 per cent operating subsidiary (NBFC) by foreign investors is 50 million US Dollars, he added.
Mr Chidambaram said foreign banks were nor allowed to open branches in rural areas.
''Most branches of the foreign banks are in tier 1 towns and big cities like Mumbai,''the Minister said.
UNI AR RR BD1255