|Maria Castillo Fernandez|
Teresa Casal and Vivek Y. Kelkar spoke to Maria
Castillo Fernandez Head of the division of India at EEAS
Foreign banks could not afford not to be in India and need to look at ways in which they could work there even with the current problems of market access, especially in facilitating trade, even as the EU was looking at ways and in dialogue with the Indian government to open market access. This was a key message given by Maria Castillo Fernandez in an exclusive interview with ITFA.
The Indian market was looking increasingly positive for banking and insurance following the government change earlier in 2014 and banking industry organisations should be working closely with their counterparts in India to drive the changes required to bring the country’s banking into the international sphere, she pointed out. Ms. Fernandez also highlighted that these contacts would augment the work that the European Union is doing in its efforts to seek greater market access to India, especially in the banking and insurance sectors.
The EU had also presented a memorandum to the Indian government with the following recommendations, result of the views expressed by the EU business representatives in India:
· The exploration of further flexibility in PSL requirements and lower the limitations to the opening of pure corporate banking outlets in tier -1 cities;
· Removal of regulatory constraints to the introduction of financial leasing and factoring
· Ensuring a stable and dependable full national treatment (FNT) to WOSs in future.
But the new Indian government led by Prime Minister Narendra Modi was seen as taking steps to open up the Indian economy across all sectors including in banking and insurance, she pointed out. While still spelling caution since the implementation of the policies was still to be seen, Ms.Fernandez said, “It is very early to say where the Modi government will make a difference but there is certainly a change in India happening. There are a lot of initiatives and he is really focused on economic growth.”
“There are equity caps in the service sectors, especially in banking and the shareholding and voting rights are limited to 26%. There are restrictions on banking products that for importers factoring and financial leasing are not possible. That is certainly a block but India does recognise that it has to open up and we are positive that there will be more flexibility in finance. The Indian central bank, The Reserve Bank of India, has been in the latest months taking steps in this direction,” she said.
Ms. Fernandez pointed out that the key to opening markets like India was continuing dialogue. “One of the issues that we feel we need more is the business to business dialogue in all the sectors. This is where I see where associations like the ITFA play an important role especially since it can promote trade and best practice,” she said.
She pointed out that banking was one of the key sectors on the European Union’s agenda when it came to India and said that the Modi government’s “Make in India” initiative could be an opportunity for both sides to improve trade and develop trade related banking products even within the present constraints. “The Indian market has a huge potential across all sectors and we have seen the markets taking the new trends in the initiatives and the new change in a very positive way. There is 5.6% GDP growth predicted next year so let’s see.
A copy of the Memorandum is available to our members on request which we trust you may find of interest. It is the result of views expressed by EU business representatives and not an official document representing the views of the European Union - is aimed at offering a snapshot of these comments and recommendations. These recommendations are without prejudice to the EU position on the EU/India FTA (Free Trade Agreement) negotiations as some of these sectors and policy issues may be addressed under those negotiations.The Memorandum refers to untapped growth possibilities for further investment and trade growth between the economies of the European Union and India and how European investment in India remains significantly lower than that in the other BRICS (Brazil, Russia, India, China and South Africa) nations.