The government of India is trying to attract more foreign banks — but with strings attached. Indian regulators are expected to issue new rules for foreign banks that strongly encourage them to open branches in rural areas and earmark services to groups such as poor farm workers.
But the BBC’s Rahul Tandon says foreign banks might not have a lot of incentive to open branches in impoverished, rural India.
“Do they want to take that opening?” asks Tandon. “Because if they come in here as subsidiaries, they’ll have to set up a lot of their banks in rural areas of India, and I think a lot of foreign banks will look at that at the moment and say, ‘We don’t want to do that.’ Because if they give loans in those areas, there’s very little for them to secure those loans against.”
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