Mumbai, August 17 KV Kamath, Managing Director and Chief Executive Officer, ICICI Bank, the country’s largest private sector bank with over $52 billion in advances, has come out openly against further opening up India’s banking sector to foreign players in April 2009.

In its roadmap for liberalising the banking sector, the Reserve Bank of India (RBI) had in February 2005 said foreign banks might be permitted to enter into merger and acquisition (M&A) deals with private banks in India subject to the overall investment limit of 74 per cent. This was to be preceded by a review by the government and the RBI of the extent to which foreign investment has penetrated into Indian banks and the functioning of foreign banks in the country.

Kamath said India probably figured among the top 20 per cent of countries in terms of openness of the banking sector. “What more opening up are we talking about? We ought to look at this on a reciprocal basis. If somebody is open and allowing us, then we should allow the same degree of reciprocity,” he said.

According to India’s largest private banker, 80 per cent of countries where ICICI Bank is in today are not open as much as India is. His sharp reactions less than eight months when the RBI and the Finance Ministry will review the roadmap for presence of foreign banks are significant in the backdrop of irritants Indian banks faced in Singapore despite a Comprehensive Economic Cooperation Agreement between the two countries. Further, global trade talks in Geneva have failed leaving less elbow room for discussing separately an offer on services between member countries.

ICICI Bank is present in 18 countries today and is eyeing a presence in Singapore. But Kamath’s experience with the norms there has not been the best. “If a foreign bank were to go and set up the business in Singapore, you can’t link your ATM. In India, on day one, a bank that comes in is allowed to network its ATM with others. People don’t understand the barriers for entry in most countries,” he pointed out.

RBI Deputy Governor V Leeladhar had in November last observed that the share of foreign banks in the assets of India’s banking system stood at 49 per cent at the end of January 2007. This was far in excess of the commitment of 15 per cent at the WTO, he had said, adding that the Indian regulatory regime was much more equitable and provided a far more level playing field to foreign banks than in most developed and emerging economies.

While the government and the RBI, more so, are aware of the difficulties Indian banks face in foreign countries, they have not withheld from going beyond the WTO commitments of allowing only 12 foreign branches a year. Going by the commitments, licences for new foreign banks might be denied when the share of foreign banks’ assets in the country exceeded 15 per cent. However, India has never invoked this limitation so far to deny licences to the new foreign banks.