The Confederation of All India Traders (CAIT) has strongly criticized ICICI Bank for allowing Peoples Bank of China to invest in the bank despite strong sentiments prevailing in the country against Beijing and its anti-India policies.

The CAIT said that this is a second such instance of a Chinese bank trying to make inroads into the Indian banking system.

Earlier this year, the People’s Bank of China had made an investment in HDFC Bank. “The CAIT has asked Finance Minister Nirmala Sitharaman to direct both ICICI and HDFC Bank to return the investments by Chinese bank,” a statement said.

CAIT Secretary General Praveen Khandelwal said that it seems quite clear that China has designed a well-planned strategy to make an intrusion into the Indian banking sector which is quite well regulated and is very important for the financial health of the country.

Even though the Government had introduced a mechanism to check the foreign portfolio investments, there is nothing concrete yet from the RBI to restrain and control the funding coming in from China.

CAIT National President BC Bhartia has said that this sudden interest of China into India’s banking sector raises an alarm bell for the entire banking sector and the Reserve Bank of India, being the custodian of India’s banking sector must now be on high alert to closely monitor this sinister strategy of China which in the long run can be detrimental to the nation.

“Certainly, the present investments might be small but we should not forget that its a part of strategy of China,” he added.

The Chinese central bank – People’s Bank of China has now acquired an equity stake in ICICI Bank. The investment by the People’s Bank of China in ICICI Bank is modest. It subscribed to the recent ICICI Bank’s Rs 15,000 crore capital qualified institutional investors (QIP) placement and invested Rs 15 crore in the private lender.

The government had in April notified new norms for FDI investments by neighbouring countries which would require approvals. It is not clear if portfolio investments need to go through some vetting process or the government will continue with this open route till the time no FDI approval is required.

The Chinese central bank was among the 357 institutional investors which included domestic mutual funds, insurance companies and global institutions that subscribed to the issue. Some of the other prominent investors included Government of Singapore, Morgan Investment and Societe Generale.

The investment comes at a time when business and trade relations between India and China have nosedived after the Galwan valley clash on June 15.

Earlier, a disclosure by HDFC had caused a flutter after PBOC holding breached 1 per cent mark. HDFC had clarified that Chinese central bank, People’s Bank of China (PBOC) has been an existing shareholder of the company and only the disclosure was being made as they hit the 1 per cent threshold.

With regard to export of Chinese goods to India, China started the first year in 2001 with only $2 billion of exports to India which has risen up to $70 billion in 2019. A whopping increase of 3500 per cent and in the same way, China must be looking at country’s financial and banking sectors.

Both CAIT leaders have urged Sitharaman to take immediate cognizance of this entire matter and devise a policy framework to thwart China’s plans and protect the sovereignty of the banking system as also advise the RBI to take necessary steps immediately.

(With inputs from IANS)