India allows EU banks to open up to 15 branches under financial services pact of FTA

Banks from the European Union will be allowed to open up to 15 branches in India over a four-year period under a free trade agreement on financial services concluded between the two sides, the finance ministry said on Wednesday.

The agreement on branch expansion is a step up from India’s earlier commitments under the World Trade Organization’s General Agreement on Trade in Services (GATS), which allowed up to 12 branches.

Under the agreement, India has also offered enhanced foreign direct investment limits of up to 74% in banking and reiterated its recently liberalised policy allowing 100% foreign ownership in the insurance sector.

“These offers position the EU’s financial service suppliers competitively in India’s dynamic and rapidly expanding financial services market, while simultaneously reflecting India’s commitment to progressive market liberalisation,” the finance ministry said.

The financial services deal is aimed at providing a regulatory and institutional framework to improve market access and deepen integration between the two financial systems, at a time when total services trade between India and the EU stood at about $83 billion in 2024.

India exported around $700 million worth of financial services to the EU in 2024, while imports from the bloc were about $600 million, the statement said.

The agreement includes provisions on cooperation in digital payments and financial technology, including interoperability of electronic payment systems, cross-border real-time payments and collaboration in areas such as regulatory technology, supervisory technology and central bank digital currencies.

The agreement provides safeguards against arbitrary or discriminatory credit assessment practices, ensuring parity of treatment for Indian financial institutions with domestic EU entities and facilitating market access for Indian banks, insurers and other service providers.

Currently, five EU banks operate 33 branches in India and 17 maintain representative offices, while three Indian banks operate a total of five branches in the EU, according to the government.

The deal is expected to facilitate greater bilateral investment and expand the presence of financial institutions on both sides, the statement added.