Why foreign capital flooding banking sector

WHAT'S driving the foreign capital inflows —close to $15 billion so far this year alone— into financial sector of late? Already foreign institutions own 48.4% in HDFC Bank and 46.8% in ICICI Bank. The regulatory cap for foreign ownership in private banks is 74%

- BENN KOCHUVEEDAN @ Mumbai

Since January, there has been an influx of foreign investments in the country’s financial services companies, with October capping the biggest deals in Federal Bank and RBL Bank deals. Blackstone invested 76,196 crore in Federal Bank, while Emirates NBD acquired 26% stake in RBL Bank for %11,636 crore.

While each of these deals is significant, they signal something larger - a global relook at the country’s financial sector and growth potential. The sector was once considered overregulated and fragmented, now it’s emerging as one of the world’s fastest-growing and most interesting destinations for long-term investments. The RBI has taken a positive, but cautious, stance in allowing the entry of global entities.