Foreign banks operative in India have said that unless they receive equal treatment as their domestic counterparts in terms of branch expansion, they would not keenly participate in local incorporation.

The banks also have the fear that in case they become wholly owned subsidiaries of their parents residing abroad, then RBI may force them to get listed on local bourses.

"We fear we would have to list in the country, which none of the banks want because it's too much of a commitment for a subsidiary in terms of capital and managing a new set of shareholders," the chief operating officer of a foreign bank said.

Thus, these banks along with the Indian Banks' Association (IBA) would be talking about these issues with RBI.

The World Trade Organization (WTO) norms dictate that RBI has to grant 12 new branch licenses to foreign banks per year. Although the apex bank is fulfilling the norm, the foreign banks are not satisfied as they feel the apex bank shows more liberty towards domestic banks.

Regarding this issue, IBA has had its first meeting with foreign banks.

"We have had just one meeting so far. The draft will be ready by the end of June. Individual banks will also send their responses," said a senior IBA official on condition of anonimity.

"The main issues relate to equal treatment when it comes to branch expansion. They also want clarity on whether listing would be mandatory and whether they would have to meet 40% priority sector requirement and also support government-sponsored sche-mes," he said.

"In the current form, we see no incentive in converting ourselves into a subsidiary unless RBI is willing to treat us on a par with domestic banks when it comes to branch expansion," said the chief executive officer of a foreign bank.

"Conversion into a subsidiary does not give them advantage in terms of opening of more branches. This restriction has been constraining their growth and is the biggest issue in their day-to-day operation," said Bobby Parikh, managing partner of consultancy BMR and Associates.