India offers higher FDI, easier bank branch norms under New Zealand FTA
New Delhi, Dec 23, 2025
Under the India-New Zealand FTA's Financial Services Annex, India has offered higher FDI limits in banking and insurance and a simpler licensing regime for foreign bank branches
India has offered higher foreign direct investment (FDI) limits in banking and insurance and a more liberal bank branch licensing framework under the Financial Services Annex of the India–New Zealand Free Trade Agreement (FTA), signalling a calibrated but forward-looking approach to financial sector liberalisation.
What changes has India offered on foreign bank branches under the FTA?
Under the agreement, foreign banks will be allowed to establish up to 15 branches over a four-year period, an expansion from the 12 branches permitted under India’s commitments at the World Trade Organization’s General Agreement on Trade in Services (GATS).
“India’s sectoral offers represent a forward-looking liberalisation approach, featuring enhanced FDI limits in banking and insurance, alongside a liberalised bank branch licensing framework,” the finance ministry said in a statement. “The expansion in branch limits reflects India’s commitment to progressive market opening in line with its broader strategic objectives,” it added.
How does the finance ministry see the agreement benefiting both countries?
The finance ministry statement said the commitments would enable Indian financial service providers to expand operations in New Zealand, strengthening India’s financial services exports and supporting long-term sectoral growth. At the same time, the framework is expected to position New Zealand’s financial institutions competitively in India’s large and rapidly expanding financial services market.
“The offers are designed to create mutual opportunities—supporting the internationalisation of Indian financial institutions while welcoming New Zealand players into India’s dynamic financial services ecosystem,” the finance ministry said.
When were negotiations concluded and what does the annex cover?
India and New Zealand concluded negotiations on the Financial Services Annex of the proposed FTA on December 22, 2025, with the final outcome agreed during the last round of talks held on December 10. The annex goes beyond standard commitments under the WTO’s GATS and comprises 18 articles covering banking, insurance, fintech, digital payments and regulatory cooperation.
What cooperation is planned on digital payments and fast payment systems?
A key pillar of the agreement is cooperation on electronic payments and real-time transaction infrastructure. Both sides have agreed to collaborate on domestic payments interoperability and real-time cross-border remittances and merchant payments through integrated Fast Payment Systems (FPS), leveraging India’s digital public infrastructure such as UPI and the National Payments Corporation of India (NPCI).
What does the annex say on fintech and regulatory safeguards?
The annex also includes provisions on fintech collaboration and regulatory innovation, including mutual learning from regulatory and digital sandbox frameworks, data governance safeguards to preserve regulatory oversight and consumer privacy, and assurances against discriminatory credit assessment practices in the New Zealand market.
What is planned on back-office and financial services support functions?
Another element is cooperation on back-office and financial services support functions, which is expected to leverage India’s strengths in information technology and business process services and support cost-efficient delivery of financial services through centralised operations in India.
What is the current banking and insurance presence between the two countries?
Currently, only two Indian banks — Bank of Baroda and Bank of India — operate in New Zealand through subsidiaries, with a combined four branches. New Zealand has no banking or insurance presence in India, while Indian insurers are yet to establish operations in New Zealand.
According to the statement, the Financial Services Annex provides the institutional and regulatory framework to deepen bilateral financial integration, facilitate market access and catalyse greater cross-border investment and services delivery between the two econosmies.
[The Business Standard]
