New Delhi, Oct 19 (UNI) The Congress party today voiced strong concerns over the growing trend of foreign firms acquiring stakes in Indian banks, labeling it “imprudent” and cautioning against the potential risks to the country’s financial stability.
Congress General Secretary and Communications In-charge Jairam Ramesh highlighted the recent acquisition of RBL Bank by Emirates NBD Bank, calling attention to the increasing foreign footprint in India’s banking landscape.
“Foreign firms are gradually being allowed to acquire Indian banks. Such imprudent moves pose substantial risks to our financial sovereignty,” Ramesh said in a post on X. He pointed out that this is part of a broader pattern, citing prior takeovers like Singapore’s DBS Group’s acquisition of Laxmi Vilas Bank, Canada’s Fairfax takeover of Catholic Syrian Bank, and Japan’s Sumitomo Mitsui Banking Corporation’s purchase of a significant stake in Yes Bank.
The Emirates NBD-RBL Bank deal, valued at Rs 26,853 crore, represents the largest-ever foreign direct investment in India’s financial services sector, raising eyebrows among policymakers and opposition leaders alike.
Sumitomo Mitsui’s Rs 16,333 crore investment for a 24.9 percent stake in Yes Bank further underscores the growing foreign presence in Indian banking. Ramesh also highlighted the ongoing privatization of IDBI Bank, India’s first full privatization of a public sector bank, expected to conclude within the current financial year, signaling further shifts in the banking sector’s ownership structure.
In his post, Ramesh recalled a December 1969 news report where the then-opposition Jan Sangh criticized Prime Minister Indira Gandhi for not nationalizing foreign banks in 1969, drawing parallels to today’s situation and underscoring the long-standing debate over foreign control in India’s banking system.
These concerns come amidst reports that the Reserve Bank of India is considering easing foreign investment rules to bolster mid-sized lenders, a move that the Congress warns must be approached with caution to protect national interests. As India’s banking sector evolves, the debate over foreign participation remains contentious, balancing the need for capital and growth with safeguarding economic sovereignty and financial stability.
