RBI to review foreign banks roadmap in 2009

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Bangalore, Aug 19: The Resrve Bank of India (RBI) would undertake a “wholesome review regarding the road map” to liberalise norms for foreign banks in the country, V Leeladhar, deputy governor, RBI said on Tuesday. The first phase of the roadmap for entry of foreign banks was coming to an end in March 2009, and “there is a review to be made; wholesome review to be made,” Leeladhar told reporters in response to questions on the sidelines of a function here.

Under the first phase of liberalisation in the banking sector, allowed by the RBI, foreign banks can establish their presence by way of setting up a wholly-owned subsidiary or converting existing branches into a 100% subsidiary. The first phase of liberalisation, initiated in 2005, also aimed at giving a chance to the domestic banks to strengthen their presence and financial positions through consolidation and reform process.

He further said rising interest rates have not hurt the growth of advances among Indian banks, according to the RBI. “Growth of advances has been far better than what it was last year,” he said adding that the advances grew by 26% between July 2007 and June 2008, compared to RBI’s annual growth projection of 20%.