Do Indians still not have Access to International Banking?

No! Indians have limited access to international banking. There are over 45 international banks in India, which have various branches across major Indian cities. The largest foreign bank in India is the Standard Chartered Bank, with its branches across India. Besides, the international banks offer personal banking, credit cards, and online banking to Indian clients.

However, the international banking growth in India has been hindered by various impacts, causing limited access for Indian customers. Moreover, in the banking market, local banks in India thrive compared to foreign banks. Scroll down to understand why international banking in India is limited.

3 Reasons why Indians have Limited Access to International Banking.

Several unique and challenging obstacles have been levied on foreign banks seeking to establish themselves in India. The risk associated with establishing and operating banks is greater than any business in India.

1.   Regulatory Issues

The major challenge faced by international banking is the strict regulation challenges enforced by the Reserved Bank of India (RBI). If any international bank wants to operate in India, it must comply with various rules and regulations. Business models that cannot comply with the RBI rules and regulations cannot operate in India.

The Reserve Bank of India rules on financial enclosure require contribution banking administration and products to underbanked and unbanked population regions and customers. The rules and regulations entail charges that international banks with few branch offices and fewer sources must consider to raise low-cost that may be challenging to implement.

Because of the complexities involved, license holders for international banks are much more challenging to obtain. Aside from administrative matters, licenses to international banks are granted based on the relationship between India and the international bank’s origin country and equal agreements between the two countries’ banking controllers.

As a result, there is a significant delay between adapting and receiving the license. Meanwhile, establishing and operating a bank in the country cost is likely to rise significantly, necessitating a rethinking of the objective market.

2.   Challenges in the Marketplace

It’s hard for international banks to enter and operate in India because well-established banks exist in the market. Besides, convincing a customer to change and consider banking with you might not be easy. For instance, people who play in online casinos might find it hard to change their bank preferences for depositing and withdrawing their gambling money.

Furthermore, foreign bankers have to compete with non-banking finance groups like individual money lenders and credit cooperative societies that don’t have to follow regulations that make it hard for them to set up a formal business.

Indian banks offer products primarily for people who want to do business with them. People who live at home are the primary source of low-cost funds and fees for most banks. What the retail customer doesn’t have in value makes up for many things. As a result, research and development are also focused on the people who want to buy bank products.

3.   Infrastructural Issues

India banks use the primary banking solutions accessible in the banking sector. Commercial and retail banking is India’s most established business line, as products and innovation applications are concentrated in these areas.

India has a much higher rate of branch openings than other countries. In other countries, the objective is to maintain customer engagement via internet, mobile, and phone banking. For instance, CTS (Cheque Truncation System) has yet to be executed despite the pilot program beginning ten years ago.


International banks should also look into the rural market, which is still relatively untapped. India’s rural market includes another battleground for banking institutions with a massive rural population. International banks can influence the Indian banking system due to their greater financial strength and ability to attract more customers.

Providing advanced financial services in under-banked areas is critical in India’s financial system. They will reap the full benefits of their investments only if they can energize retail customers.

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