Decline in FDI Inflow Brings Challenges to India's Banking Sector

The decline in foreign direct investment (FDI) in India's banking sector, from USD 898 million in FY23 to a mere USD 115 million in FY25, was highlighted during a parliamentary session on Tuesday.

FDI is a pivotal source of sustainable capital for economic growth, contributing to technology transfer, innovation, and employment, Minister of State for Finance Pankaj Chaudhary noted. Despite the recent decline, FDI inflows have consistently grown since India's liberalization.

Moreover, regulatory requirements for share acquisition in banks and enforcement actions by SEBI against unregistered investment advisories were also discussed, underlining the complexities and challenges facing India's financial sector.