ICICI, HDFC bank kept on same platform as PSBs : DIPP

DIPP Secretary R P Singh clarified those private sector big lenders ICICI bank and HDFC Bank who have been classified as foreign-owned entities are on the same footing as nationalized banks as the two have been integrated under the Indian laws.

Singh told reporters, "In my view, neither ICICI nor HDFC Bank, even though their equity is owned by foreigners, suffers from any handicap, because they are incorporated in India. They are on the same footing as other nationalized banks and we have nothing to worry about it."

He said, RBI does not make any distinguish between these banks and public sector banks.


Elaborating, he said, "Banking is allowed via two ways -- either you open branches, in that case you don't technically bring FDI, or you incorporate a bank in India, take a license from RBI and than that particular bank gets equity from outside."

But in second case, he said, the lender technically becomes a foreign bank. "But that bank we are calling foreign bank only for the purpose of downstream investment, otherwise it's an incorporated entity in India. It is on the same footing as other nationalized banks in terms of priority sector lending and branch expansion."

Singh also added these banks don’t have to worry about any complications while investing in the insurance and NBFC sectors.


"Insurance has been kept out of new (FDI) rules that changed the status of ICICI Bank and HDFC Bank (to foreign owned and Indian controlled) and 100 per cent FDI is permitted in NBFC, so there should be no problem," Singh said.

He told that in a month’s time the department will be introducing a draft on the financial sector that will provide solution to the worries of the sector regarding the new FDI rules.

As per FDI rules announced last year, ICICI and HDFC Banks 74% of equities are owned by the foreigners therefore, they are considered as foreign lenders.