New Delhi, Nov 28 CPI-M Rajya Sabha member, Dr John Brittas, has written to Union Finance Minister Nirmala Sitharaman and Reserve Bank of India (RBI) Governor Sanjay Malhotra, flagging serious concerns over the growing influence of foreign investors in private sector banks, with a particular focus on the Catholic Syrian Bank, now the CSB Bank.
The CSB, founded in 1920 in Thrissur, with strong community roots and a tradition of social banking, was the first Indian bank to allow a single foreign investor, the Canada-based Fairfax Group, to acquire a 51 per cent equity stake in 2018.
Brittas described the acquisition of CSB by Canada-based Fairfax Group as a "dangerous shift" in India’s banking policy, warning that it marks a trend of increasing "foreignisation" of Indian banking, which could undermine the country's financial sovereignty.
In his letter, he noted that India’s public and private banking systems remained resilient during the 2008 global financial crisis, largely due to limited exposure to foreign ownership and influence.
However, recent policy relaxations and regulatory permissions have opened the gates for deeper foreign participation in the sector, reversing the fundamental objectives of India’s bank nationalisation movement, which sought to prioritise financial inclusion, social development and national stability, Brittas added.
The MP cited the case of CSB as a test example, claiming that the post-takeover period has witnessed a sharp decline in permanent employment, increasing contractualisation, alleged denial of wage revisions, and dilution of social banking commitments.
He argued that profit-orientation has overshadowed developmental responsibilities once upheld by the bank.
Brittas also pointed to a broader pattern of foreign equity interventions and acquisitions in domestic banks such as Lakshmi Vilas Bank, Yes Bank, ICICI Bank, RBL Bank, HDFC Bank, and Axis Bank, adding that this growing trend could eventually lead to India losing strategic leverage over its financial architecture.
He underlined the potential risk of undue external influence over credit allocation, monetary stability and consumer interests, particularly in sensitive sectors like agriculture, infrastructure and small enterprise financing.
Calling for urgent policy action, Brittas urged the Finance Ministry and the RBI to undertake a comprehensive review of the current FDI policy in banking and to examine the CSB as a case study to evaluate operational and regulatory consequences of permitting majority foreign ownership in Indian banks.
He stressed the need to protect India’s financial sovereignty, ensure responsible capital participation, and preserve the core principles of social banking at a time of global economic uncertainty.
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