RBI may delay liberalisation policy for foreign banks

The global financial crisis may force the Reserve Bank to delay the roadmap for further liberalising the banking sector by six to eight months from the scheduled date of April, 2009, a finance ministry official said.

"Opening of the banking sector to foreign players could be delayed by 6-8 months due to present uncertain global times," the official on the condition of anonymity said.

The RBI is slated to review its policy on foreign banks in April, 2009, which now could be delayed.

The RBI had earlier stated that "The second phase will commence in April 2009 after a review of the experience gained and after due consultation with all the stakeholders in the banking sector."

As per the central bank, the review would examine issues concerning extension of national treatment to wholly-owned subsidiary, dilution of stake and permitting mergers/acquisitions of any private sector banks in India by a foreign bank in the second phase.

As per the World Trade Organisation agreement, India has committed 12 branches of foreign banks in a year.

However, the RBI has been more liberal than the commitments. Between 2003 to October 2007, the central bank gave approval to about 75 new foreign bank branches.