The banking sector has played a key role in transforming the Indian economy. However, despite the various initiatives of the government to make capital more accessible, the sector’s assets have diminished significantly in the past five years, constraining banks’ capacity to lend.
As a result, the Government’s recent focus has been on addressing the tax and regulatory issues plaguing the sector, in order to make the economy more competitive and improve access to foreign capital in the Indian markets. Some of the steps undertaken by the Indian government in the last two months include issuing clarifications to boost activities in International Financial Services Centres (IFSCs), issuing minimum capitalisation norms for Foreign Direct Investment (FDI) in unregistered/unregulated financial service entities, liberalising norms for Foreign Portfolio Investment (FPI) investments and liberalising External Commercial Borrowing (ECB) norms.
In this report, we discuss the various key tax and regulatory developments in the sector in Q3 2018.