The dynamism of Indias capital and equity markets demonstrate the potential for other parts of the financial sector like banking, he said while addressing the captains of trade and industry in Mumbai.
He also suggested reforms in insurance sector by following through on Indias welcome commitment to raise the cap on foreign investment from 26% to 49%. Offer British banks licences in the medium-sized towns and smaller cities and other British banks will jump at the opportunity to be part of the huge effort to bring modern banking services to millions more Indians, he said.
A Confederation of Indian Industry report published this month noted that foreign banks held only 8.5 % of the banking sectors assets and that this limited the countrys ability to secure higher investment growth, he added.
Indias attention to macro-prudential risks enabled it to weather the storm better than the UK and other economies. I know from my conversation this morning with RBI governor Subbarao, how much both our countries have to gain from sharing our experiences in macro-prudential regulation, he commented.
UK would also like to see Indian banks establishing themselves even more prominently as big players in London and throughout the UK. Indian financial services firms are increasingly active in the the country. There are currently nine Indian banks in the UK and all of them are growing and all have plans to open more branches.
The UK is now home to more Indian banks than any other country in the world. He also announced that Exim Bank has been given a licence from the FSA to set up their bank in the UK bringing that number to 10 Indian banks and with more to follow in the future. The UK and India have slipped down the rankings of each others trading partners and with right steps by 2020, the trade relationship could deliver benefits worth 4.5 billion euro per annum shared between India and the EU.