The centre is in talks with the banking regulator, RBI to ease foreign direct investment norms for banks having over 50 percent foreign ownership but operated by Indians. These banks include ICICI bank and HDFC bank amongst others.

ICICI bank had approached Department of Industrial Policy and Promotion (DIPP) to seek clarification on the issue.

Ajay Shankar, secretary, DIPP, said at a conference of economic editors said, "One limited area is under discussion - that is the banking sector. We are holding discussions with the RBI."

As per the FDI norms released in February this year, seven banks were labelled ‘foreign-owned and India-controlled, severely restricting their investments in sectors like insurance.

DIPP, the nodal agency for FDI policies, is expected to announce the relaxations soon. After this, downstream investments of ICICI Bank and HDFC Bank in their insurance companies will not be counted as FDI.

According to norms released in February through press note 2, 3 and 4, both ownership and control of banks should be in Indian banks for them to qualify as domestic entities.

Commerce and Industry minister, Anand Sharma had said in September that the new FDI policy was working well. "If there are any issues, the inter-ministerial group can look into it. But at this stage it is too early to make any judgmental evaluation of the policy," he added.

The apex bank, however, has expressed disapproval over these norms, as they would alter the character of many Indian banks to foreign banks.