Private sector banks, ICICI and HDFC will still have to be sported as foreign banks although the Government has decided to make some exemptions in this regard. The Government would be making exemption on some equity purchases by these banks and these would not be counted as foreign investment.

According to a Government official, any non strategic equity investment from the banks' treasury operations or from the conversion of stressed corporate debt will not be counted as foreign investment.

These banks have more than 50% foreign investment which makes them foreign banks under the FDI norms. The banks have 77% and 64% foreign holding.

The foreign tags of these banks would also not put any restriction on setting up of new branches by these banks.

According to the new FDI norms, seven leading banks, ICICI Bank, HDFC Bank, ING Vysya, Development Credit Bank, Federal Bank, IndusInd Bank and YES Bank have received the foreign tag.