Congress flags concerns over foreign acquisition of Indian Banks

The Congress party on Sunday raised concerns over the increasing trend of foreign firms acquiring Indian banks, terming it “imprudent” and warning of substantial risks. Congress general secretary in charge of communications, Jairam Ramesh, highlighted the recent deal between Emirates NBD Bank and RBL Bank, saying, “Foreign firms are gradually being allowed to acquire Indian banks. These imprudent moves pose substantial risks.”

Ramesh pointed out that this is not an isolated incident, citing previous acquisitions such as Singapore’s DBS Group taking over Laxmi Vilas Bank and Canada’s Fairfax acquiring Catholic Syrian Bank. He also mentioned the takeover of Yes Bank by Japan’s Sumitomo Mitsui Banking Corporation.

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Some of the recent deals that have raised eyebrows include:

Emirates NBD Bank’s acquisition of RBL Bank: The deal, worth Rs 26,853 crore, marks the largest-ever foreign direct investment in India’s financial services sector.

Sumitomo Mitsui Banking Corporation’s acquisition of Yes Bank: The Japanese bank acquired a 24.9 per cent stake in Yes Bank for Rs 16,333 crore.

Ramesh also noted that India’s first full privatisation of a public sector bank, IDBI Bank, is expected to be completed this financial year.

In a post on handle X, Ramesh shared a news report from December 28, 1969, which highlighted the Jan Sangh’s criticism of then Prime Minister Indira Gandhi for not nationalising foreign banks in July 1969.

The Congress’ concerns come amid reports that the Reserve Bank of India is open to allowing foreign investment in Indian banks, intending to strengthen mid-sized banks.