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RBI no to 100% FDI in banking

The Reserrve Bank of India does not want to allow Indian banks to have up to 100% foreign direct investment. The regulator has rejected a proposal to this effect from the governmet of India giving no reason for its decision. Earlier too RBI has opposed allowing shareholding by foreign institutions investors in banks. Recently, HDFC Bank had secured permission from the FIPB vor 74% foreign investment. RBI has suggested as part of guidelines for new bank licenses that FDI in banking sector should be confined to 49%, but the finance ministry had overruled this stipulation and permitting 74% FDI in private banks with 49% allowed under the automatic route. Foreign holdings beyond 49% need to be cleared by FIPB. The government had come out with the proposal to allow 100% FDI when several new applicants have received in-principle approval to open payments banks and small finance banks.

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