EU Banks to Expand in India: New Deal Allows 15 Branches

Banks from the European Union (EU) will be allowed to open up to 15 branches in India over a four-year period under a new financial services agreement. This move marks an increase from India’s earlier commitments under the World Trade Organisation, which permitted up to 12 branches.

Higher Foreign Investment Limits

The agreement also offers foreign direct investment (FDI) of up to 74% in Indian banks. In addition, India has reiterated its policy allowing 100% foreign ownership in the insurance sector. These changes aim to make the Indian financial market more attractive to EU institutions.

Digital Payments and Fintech Cooperation

The deal includes provisions for collaboration in digital payments and financial technology. It covers areas such as cross-border real-time payments, interoperability of electronic payment systems, regulatory technology, supervisory technology, and central bank digital currencies.

Fair Treatment for Indian Firms

The agreement ensures safeguards against arbitrary credit assessment practices. Indian banks, insurers, and other service providers will receive treatment equal to domestic EU entities. This is expected to make it easier for Indian firms to access the European market.

Current Presence of Banks

At present, five EU banks operate 33 branches in India, while 17 maintain representative offices. On the other side, three Indian banks have a total of five branches in the EU. The new deal is likely to expand these numbers over the coming years.

Bilateral Trade and Investment

The agreement comes at a time when total services trade between India and the EU was about $83 billion in 2024. India exported around $700 million worth of financial services to the EU and imported roughly $600 million from the bloc. The deal is expected to increase bilateral investment and strengthen the presence of financial institutions on both sides.

Read more: USD/INR: Indian Rupee Falls to Record Low on Jan 29, as Capital Outflows Weigh on Currency.

Conclusion

The EU-India financial services agreement is a significant step towards liberalising the market and deepening cooperation. With higher branch limits, increased FDI, and strong collaboration in fintech, the deal promises a more integrated and competitive financial services landscape between India and the EU.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.