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Asia-PacificJanuary 3 2005

India relaxes private bank investment rules

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.
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Mr Chidambaram also promised a road map, laying out investment rules in private banks. Foreign investors are likely to have to seek central bank approval at cut-off limits along the way.

The Reserve Bank of India, the central bank, is finalising new investment rules in private banks after draft rules that it put out early last year stirred wide debate.

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