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Banking, Financial Services and Insurance (also known as BFSI) is an industry name.

This term is commonly used by IT/ITES/BPO companies to refer to the services they
offer to companies in these domains. Banking may include core banking, retail, private,
corporate, investment, cards and the like. Financial Services may include stock-broking,
payment gateways, mutual funds etc. Insurance covers both life and non-life. A lot of data
processing, application testing and software development activities are outsourced to
companies that specialise in this domain

BFSI (Banking, Financial Services & Insurance) sector globally has seen a
transformation and has grown many folds in last decade. Companies in the BFSI sector
are constantly increasing their investments in IT as part of their strategy to increase
profits, improve time-to-market of new products and services, cope with regulatory
changes and meet rising customer demands.

NPS being a long time player in IT services domain, having rich resource of skills,
expertise and infrastructure has got an edge to provide round the clock proactive
monitoring and management of Your Business Communication Systems.

Our services portfolio for BFSI sector includes

Guidelines for FDI in Banking at a Glance- Master circular

In the private banking sector of India, FDI is allowed up to a maximum limit of 74 % of


the paid-up capital of the bank. On the other hand, Foreign Direct Investment and
Portfolio Investment in the public or nationalized banks in India are subjected to a limit
of 20 % in totality. This ceiling is also applicable to the investments in the State Bank of
India and its associate banks. FDI limits in the banking sector of India were increased
with the aim to bring in more FDI inflows in the country along with the incorporation of
advanced technology and management practices. The objective was to make the Indian
banking sector more competitive. The Reserve Bank of India governs the investment
matters in the banking sector.
According to the guidelines for FDI in the banking sector, Indian operations by
foreign banks can be executed by any one of the following three channels -

• Branches in India
• Wholly owned subsidiaries.
• Other subsidiaries.
In case of wholly owned subsidiaries (WOS), the guidelines for FDI in the banking sector
specified that the WOS must involve a capital of minimum Rs. 300 crores and should
ensure proper corporate governance.

Problems Faced by the Indian Banking Sector-


FDI in Indian banking sector resolves the following problems often faced by various
banks in the country:
• Inefficiency in management
• Instability in financial matters
• Innovativeness in financial products or schemes
• Technical developments happening across various foreign markets
• Non-performing areas or properties
• Poor marketing strategies
• Changing financial market conditions

Benefits of FDI in Banking Sector in India-

• Transfer of technology from overseas countries to the domestic market


• Ensure better and improved risk management in the banking sector
• Assures better capitalization
• Offers financial stability in the banking sector in India

* general note on single policy for fdi in BFSI


India will unveil a single policy for foreign direct investment, including in sectors such
as financial services, insurance and banking by March 31,2010 Commerce and Industry
Minister Anand Sharma has disclosed.

After 3 days of discussions with senior Obama administration officials, Sharma


acknowledged that "it's true that we were slow off the block when we started the process
of economic reforms and liberalization," but asserted in the past few years, "it would be
appreciated that India has moved much faster."

"India works on a very small negative list and the FDI which comes into India - the
majority of the sectors - are in the automatic route," he said.

Sharma argued that for all of the criticism and whining, "When you look at the pace at
which some of these sectors - financial services, insurance and banking - have been
opened, then India has done far better than many of the countries, including in Europe
and here, in these sectors."

He pointed out that "you have more US bank branches in India. You have more British
bank branches in India, or for what matter, of the other countries, and there are
partnerships of the major insurance companies with the premier insurance companies in
India."

"So, it is, I'd say, an incremental movement. Whatever decisions India has taken have
been after careful consideration and evolutionary…by building a consensus and these
policy decisions are enduring ones."

Sharma said however that come March 31, there would be a crystallization of certain
steps his ministry had initiated to open out to more flows of FDI with more relaxed limits
that would be attractive to investors.

"Our last FDI policy on the upper limit of FDI in these sectors, which are not in the
automatic mode, where the Foreign Investment Promotion Board approval was required
since 1996 was Rs 600 crore (Rs 6 billion). Now, we have through a cabinet decision on
the initiative of my ministry, doubled the cap from Rs 600 crore to Rs 1,200 crore (Rs 12
billion), and what is even more significant was that earlier, Rs 600 crore used to be the
cost of the project, but now it is not the cost of the project but net FDI inflows."

Sharma also said that "we will also in the next few days come out with a single FDI
policy document," and pointed out that "when we started the opening up of the Indian
economy and inviting FDI, all policy decisions were communicated through what we call
the press notes and every year had its series of press notes."

"We had 177 press notes detailing the FDI policy. It was clear that we needed greater
clarity, predictability and a policy document, which is easy to comprehend. We had
started this process - a draft was put out in the last week of December 2009 for
stakeholders consultations inviting responses, for inputs from industry, globally from
investors throughout the world and by the stakeholders in India, the chambers of
commerce and industry."

Sharma said that this consultative process was now completed and on March 31, "we will
come out with a single FDI policy document, which has subsumed all 177 press notes."
He said that in order to make this operational, "We have also set up - with government
and industry in partnership - through a cabinet decision, an entity, a non-profit company
called Invest India and FICCI is the partner with the Indian government and we also
intend to give some equity at the appropriate time to all the states of the Indian union to
bring them on board."

Sharma said that "we are in the process of rationalizing and bringing a greater degree of
uniformity when it comes to various mandated approvals for investors."

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