Foreign banks' business in India will increase, the Finance Ministry held a major meeting; RBI also gave this approval!

News Topical, Digital Desk : Last month, the RBI introduced draft rules to ease existing policies for foreign banks to set up or expand operations in India. Taking this process forward, an important meeting of the Inter-Departmental Committee (IDC) was held on Thursday (November 20, 2025) under the aegis of the Ministry of Finance, in which the proposals received from the RBI regarding the operations of foreign banks in India and the expansion of Indian banks abroad were reviewed. The IDC is believed to have approved the RBI's proposals, which will be made public in the near future.

The meeting was chaired by M. Nagaraju, Secretary, Department of Financial Affairs, and attended by senior officials from the Ministries of External Affairs, Home Affairs, Commerce, and the RBI. The Finance Ministry stated that the IDC meeting discussed proposals from the RBI, including those related to the establishment of branches, representative offices, and subsidiaries of foreign banks in India.

There was also discussion about the expansion of Indian banks abroad.

In addition, proposals for overseas expansion by Indian banks were also reviewed. This meeting is an important step towards strengthening financial inclusion and global banking cooperation. Requests from foreign banks to relocate their existing branches within India were also examined.

The committee reviewed proposals by Indian banks for expansion through branches, representative offices or subsidiaries abroad, in an effort to strengthen India's global banking presence. The IDC functions under the Department of Financial Services (DFS) of the Ministry of Finance and is the nodal department for such proposals from both foreign and domestic banks.

Since the operations of foreign banks are also linked to national security, a comprehensive assessment of commercial interests is made in consultation with the Ministry of Home Affairs and Foreign Policy. Some believe that the draft policy issued by the RBI in October 2025 is related to the ongoing negotiations between India and the United States regarding a trade agreement.

America wants India's market

The US government is in favor of allowing its financial and banking institutions to expand rapidly in the Indian market. However, the RBI and the Indian government have been cautious in this regard. The ongoing negotiations between the Indian and US commerce ministries regarding a trade agreement also include providing a more favorable environment for each other's financial and banking institutions.

The RBI's recent draft policy cites the principle of reciprocity. This means that banks in countries where Indian banks enjoy an environment for expansion will be provided with a similar environment in India. The draft policy also includes several suggestions to simplify the expansion of foreign banks, such as removing financial eligibility criteria and expediting the approval process.

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