It’s quite a role reversal — India demanding that the US and Singapore open their markets to Indian investors. This curious situation could soon come to a head, with many Indian bankers saying the country should close its banking market to US and Singaporean investors unless Indian banks are given greater access to their markets.

“It is high time we started negotiations with global banking regulators,” says a senior official at a private sector Indian bank, requesting anonymity. “We have nothing against foreign banks getting a few branches more than they should under the WTO (World Trade Organization) deal. But why aren’t we given the same treatment abroad?”

The answer is that protectionism, while treated as a four-letter word by US and Singaporean diplomats, is a stinging reality in many of their industries. US agriculture is the most notorious offender of the country’s own free market philosophy. But with resentment against the closed banking markets of US and Singapore simmering here, this could soon change.

An unreleased RBI (Reserve Bank of India) draft paper on the differences in treatment accorded to foreign banks operating here and Indian banks seeking to operate abroad has underlined how much India’s inability to get reciprocatory licences in foreign countries is hurting the country’s banks.

While 60 foreign banks have been allowed to open 258 branches in India, only 18 Indian banks have been able to establish a total of 112 branches abroad, says RBI. Many of these branches pre-date Independence, but a substantial number were opened after India’s economic reforms in the 1990s. While incompetence and lack of initiative of Indian banks has played a part, so has foreign protectionism. For example, ICICI Bank has been trying to enter the US for four years, while Singapore has frozen applications from State Bank of India and ICICI Bank for several years.