The decision on the Indian-ness of the country's private sector banks has been left in the hands of RBI. This has been done by the Government in order to come to an ultimate solution regarding the foreign nature of these banks without relaxing any of the foreign direct investment (FDI) norms.
The decision to do so has come after year long discussion on the issue. Finally the apex bank has been given the duty to decide on the ownership and control of such banks.
According to a senior government official, the norms set would depend on parameters like voting rights and the power to appoint directors.
"We need to recognize that the structure of each bank is different and accordingly redefine the concept of ownership and control for the banking sector," he said.
So far seven private sector banks are facing the trouble of being considered as foreign banks. They include ICICI Bank, HDFC Bank, ING Vysya, Development Credit Bank, Federal Bank, IndusInd Bank and YES Bank.
The Government has however decided to make some exemptions in the case of ICICI and HDFC Bank.
The declaration sighting these banks as foreign banks had created quite some stir. ICICI and HDFC Bank filed complaints against RBI and Finance Ministry regarding the new FDI norms and sought clarifications. After this long lasting issue, the Government has come to this decision.