Disclaimer:I am market making in Ratnakar Bank
Allowing foreign banks greater operational ground may both help protect the interests of depositors and fund capital projects in India. It may even bring about cost-effective banking backed by technology, thus increasing banking penetration.
While mergers and acquisitions may be some time away, smaller banks like IndusInd Bank, ING Vysya, Yes Bank, Dhanalakshmi Bank, Karnataka Bank and Ratnakar Bank — which are looking for capital to expand their footprint or scouting for investors — will see their valuations rise dramatically.
A senior official in a foreign bank said, “Asking banks to be wholly-owned subsidiaries and to get a letter of comfort from the parent is like creating a one-way street for the banks. RBI wants to ring-fence and a guarantee from parent banks. It will be good news to the smaller banks like Ratnakar, IndusInd and others of similar size that are looking for funds to expand.”-from DigitalFC