The British economy may take a long time to recover from the worst financial crisis in decades, but the UK government is keen to see more Indian banks enter and expand their operations in the country.
Speaking to FE, Stuart Fraser, policy chairman at the City of London, said that the UK market, despite recession, offers a real opportunity for Indian banks with an existing presence, and the growing number of Indian banks looking to expand overseas for the first time.
?We are very happy to see major Indian players expanding their branch networks and welcome this trend continuing. Our regulations encourages banks provided all players have adequate capitalisation and fulfil all regulatory and prudential norms,?? he said. Competition leads to cost efficiencies and greater choice for consumers,? he added.
On whether UK wants similar freedom for their banks to expand in India he said, ?It is certainly true that we haven?t seen the greater opportunities for foreign banks to expand their branch networks that we would wish to have seen. The indefinite shelving of the RBI banking roadmap is disappointing, and we would like to see a clear timetable for the liberalisation of the sector,?? he said.
Foreign banks are well established players in India?s financial sector, and their commitment has not waned during the financial crisis or in its aftermath.
?We are somewhat encouraged by this year?s Budget statement that the market may be opened to new players as an indication that the reform process is continuing,?? he said. On whether UK investors are keen to invest in Indian core sector projects, he said the UK has a range of expertise in infrastructure investment and development nationally and overseas, particularly using the public private partnership(PPP) model.
?Well designed, bankable projects have the potential to attract UK?s interest, and there are a range of funds run from London specifically targeting investment in Indian infrastructure.??
?However, there are a number of reforms required to make India a more attractive destination and increase this flow of funds particularly around the supply of bankable projects, implementation, taxation and regulatory issues,?? he said.
According to him, UK insurers have a longstanding presence through successful joint ventures with Indian partners.
?Currently growth in the market is constrained by the 26% equity cap and for this reason we hope to see the Insurance Bill passed, which has long been anticipated,? he said. The insurance sector has grown rapidly since the sector was opened in the 1990s, and we see a raising of the FDI cap to be an opportunity for greater penetration of insurance across India’s population,?? he added.