The coalition government of Manmohan Singh is determined to transform India. Karina Robinson reports from New Delhi on the progress so far. The measured interventions in the Lower House of India’s Parliament had come to an end. The wood-panelled chamber of the Lok Sabha slid into orchestrated chaos as the opposition benches emptied and its gesticulating members surrounded the speaker, enthroned in his chair.Dressed in saris, white dhotis, turbans and Western-style trousers and shirts, the parliamentarians raised their voices about a crisis in the Jharkhand state Parliament.
HSBC in India is preparing for an expected boom in the SME sector by targeting smaller businesses that have growth potential. Kala Rao reports from Mumbai.No customer is too small for HSBC, says Subir Mehra, who heads the bank’s small and medium-sized enterprise (SME) business in India. That is what prompted it to mine its retail banking customers in India, looking for small businesses that are poised to grow dramatically in a fast-expanding economy.
New regulations for foreign banks in India have ended hopes of unrestrained growth in the expanding retail finance market. Foreign banks cannot acquire a local private bank except in the case of a weak bank, identified by the regulator. Additionally, local subsidiaries set up by foreign banks will not be able to open branches freely. These restrictions will stay in place until 2009, when fuller deregulation is expected, including allowing market acquisitions of local private banks.
Foreign investors will be allowed to acquire up to 74% of private Indian banks, up from 49%, India’s finance minister, Palaniappan Chidambaram, announced in early December. This clears up doubt over whether foreign investors could participate in the consolidation of the fragmented private banking sector.
India’s current government and finance scene includes an energetic, forward-thinking and pragmatic team. Kala Rao profiles the 10 key decision-makers. When, against the odds, the Congress party triumphed in India’s national elections in May, the country’s stock market nosedived. Investors feared that state intervention and meddling would come back into fashion, interest rates would rise and prospects for economic growth would diminish. In short, India’s reform process would move quickly into reverse.
A proposed policy on ownership rules for Indian private banks put out by the Indian central bank on July 2 has left bankers and investors dismayed. To ensure that ownership and control of private banks is as diverse as possible, the Reserve Bank of India, the central bank, proposes to limit ownership by a single investor or corporate group to 10% of the paid-up capital of the bank.