No need for separate FII, FDI caps: FM

The Minister already has a report on FII liberalisation by an internal committee, headed by Chief Economic Advisor Ashok Lahiri, which has recommended that FII holdings should essentially be treated as over and above FDI sectoral caps.

FII-FDI fungibility in the private banking sector would mean that FIIs can pick up stakes in private banks beyond the 49% that is currently permitted. While the government has allowed overall foreign investment up to 74% in private banks, it proposes to permit foreign banks to pick up 10% stake a year over the next 3-4 years.

Similarly, FIIs may take the entire 26% stake in the print media where the government has already allowed 26% FDI. In the telecom and civil aviation sectors, the government proposes to increase FDI limit to 74% and 49%, respectively.

Here too, companies will have the flexibility to bring in more portfolio investment if they are not keen on FDI.

Chidambaram said global banks like Standard Chartered and Citibank, whose chief executives and chairmen he met during the course of his week-long foreign visit, had welcomed the twin-track policy elaborated by Prime Minister Manmohan Singh during his US visit.

In the twin-track policy, during the next 3-4 years, foreign banks will be able to increase their holding in India, even as Indian public sector banks consolidate and prepare themselves for the Basel II prudential norms and a stricter regulatory regime in India.