The Inter-Departmental Committee (IDC), headed by Financial Services Secretary M Nagaraju, deliberated and recommended on a set of proposals submitted by the Reserve Bank of India (RBI) regarding the establishment of branches, representative offices and subsidiaries of foreign banks in India, the finance ministry said on Thursday.
What do these proposals suggest?
These proposals, which are part of a broader strategy to facilitate the entry and operations of international banking institutions in the country, were thoroughly examined to assess their alignment with regulatory requirements, India’s financial sector priorities and national security considerations.
Alongside this, the committee also reviewed proposals from Indian banks seeking to widen their overseas footprint by setting up branches, representative offices or subsidiaries in foreign jurisdictions.
The IDC also evaluated applications from foreign banks seeking approval to relocate their existing branches within India, indicating their business realignments, evolving customer demands or strategic shifts in operations.
What did the finance ministry say?
“After due consideration, the committee recommended the proposals placed before it,” the finance ministry said.
The IDC functions under the Department of Financial Services (DFS), which serves as the nodal authority for evaluating such proposals from both foreign and domestic banks. Before arriving at its recommendations, the committee consults with member ministries including the Ministry of Home Affairs (MHA), the Ministry of External Affairs (MEA), and the Department of Commerce (DoC) to ensure a comprehensive and consensus-based approach.
In March 2025, India had 44 foreign banks and 34 representative offices, with foreign bank branches continuing their decline from 874 branches and 36 representative offices in March 2021.
The decline in branch numbers shows that growth remains selective — foreign banks are likely focusing on profitable segments (wealth, corporate banking) rather than scaling retail branch networks indiscriminately.