Foreign interest in Indian banks will continue, but expect a trickle, not a flood: Banking veterans

Foreign interest in India’s banking sector is quietly rising, led by investors from Japan and the Middle East taking strategic stakes in lenders like RBL Bank and Yes Bank . Yet, banking veterans Zarin Daruwala, Former MD & CEO of Standard Chartered Bank and Srinivasan Varadarajan, Banking Veteran and Market Expert, believe this will be a “trickle, not a flood.”

They note that while small and mid-sized banks may attract selective foreign capital, the real transformation could come from the RBI’s new M&A lending norms, which open fresh opportunities for banks — though with clear limits and measured expectations.

Below are the edited excerpts from the interview.

Q: We saw Standard Chartered and Citi actually reduce their businesses in India, but now we have two banks from different ge