India attacked over UK bank snub

Lord Jones wants a greater freedom in Indian finance

India's central bank has been accused of "protectionism" amid claims that it refused a UK bank permission to open a rural branch network in the country.

British trade minister, Lord Jones made the allegation during a trip to India ahead of Gordon Brown's visit.

The comments are the latest about the Reserve Bank of India's (RBI) tight control of the financial sector.

RBI said Standard Chartered had last year been granted some licences to operate in the country.

'Development catalyst'

Lord Jones said that the Standard Chartered's plans would be good for the bank and for India's rural areas.

"Here you have a fabulous British bank that will do two things," Lord Jones, the former CBI head, told India's Business Standard newspaper.

"It will get access to the market but at the same time, it will act as a catalyst towards rural development and inclusive growth in India. Just out of sheer protectionism, the RBI says no."

Lord Jones said that the bank was waiting for an acknowledgement to their request to open rural branches, which had been lodged last year.

Foreign banks have been eyeing India as a key emerging market, with outside investors having to apply to the RBI for licences to operate.

It expected that during the Prime Minister's visit to India, which begins on Sunday, an accompanying business delegation will sign deals worth about $6bn (£3bn).