Foreign banks want to be heard

India CEOs of 12 banks form pressure group within IBA.

To make sure their voice is not lost in the corridors of power, the India CEOs of 12 banks have formed a pressure group within the Indian Banks' Association (IBA).

The group had its first meeting today and will henceforth meet once every quarter.

Sanjay Nayar, CEO of Citigroup in India, is the chairman of this standing committee of foreign sector banks.

The other banks in the group are HSBC, Standard Chartered, Deutsche Bank, BNP Paribas, ABN Amro, Bank of America, American Express, DBS Bank, JP Morgan, Barclays, and Calyon.

On the agenda for today's meeting were the recent draft guidelines issued by the Reserve Bank of India (RBI) on non-banking finance companies (NBFCs) and priority sector lending, among other issues, banking sources said.

The proposed revision of NBFC and priority sector norms is expected to hit the foreign banks the most.

Standard Chartered Bank's India CEO Neeraj Swaroop had earlier this month said the guidelines would impact the way NBFC subsidiaries of foreign banks operated in the country.

At present, there are different sets of regulations for large NBFCs and banks and the RBI wants to reduce arbitrage.

"The combined applicability of prudential norms across bank-owned NBFCs and banks will affect the liquidity of NBFCs and how you fund balance sheets of NBFCs," he had stated.

The other issues discussed included the lack of transparency in the RBI's policy on opportunities for inorganic growth for foreign banks.

For example, the RBI policy says foreign banks can acquire weak private sector banks.

However, the central bank never identifies weak banks. Also, whenever foreign banks submitted an acquisition proposal, it was rejected, the sources said.