The UK has consistently been a key market for Indian banks with overseas operations. Significant commercial and historical ties between the UK and India have given Indian banks opportunities to serve the UK’s Indian diaspora – the largest ethnic minority group in the country at 1.5 million people – and to facilitate trade and investment ties between the two countries. London also represents a gateway to other European markets. So how will the UK’s decision to leave the EU affect Indian banks’ plans?
Today, nine Indian banks have operations in the UK, four of which have already acquired subsidiary status. The others are still branches. The number of Indian bank subsidiaries is set to grow in the next few months as a result of a 2014 ruling by the Bank of England’s Prudential Regulation Authority (PRA) that all non-European Economic Area (EEA) banks with retail or small and medium-sized enterprises (SME) balances of more than £100m ($131.6m) must acquire subsidiary status. Indeed, non-EEA bank branches are harder for the PRA to monitor as they are one legal entity with the parent bank and are supervised by the regulator in the country of origin. Branches also rely on the parent bank for capital.
