Global finance centralisation accelerates as UAE bank gains majority control of Indian lender amid deregulatory shifts

The deal overlooks India’s indigenous banking traditions, such as the centuries-old hundi system of informal credit networks, which have sustained local economies without reliance on formal banking institutions. These systems are rooted in trust and community reciprocity, contrasting sharply with the extractive, profit-driven models of Gulf-based banks. Additionally, India’s cooperative banking sector, which serves millions of rural and marginalised communities, is structurally incompatible with the profit-maximising logic of Emirates NBD, risking further financial exclusion.

This transaction is part of a 30-year trend in India’s banking sector, beginning with the 1991 liberalisation reforms that gradually dismantled the 'License Raj' and opened the door to foreign ownership. The relaxation of ownership caps for Emirates NBD mirrors similar moves in the 2000s, when foreign banks were allowed to increase stakes in Indian private banks. Historically, such deregulation has often preceded financial crises, as seen in the 2008 global meltdown, where unchecked capital flows exacerbated systemic risks.

The Gulf’s financial expansion into India reflects a broader shift in economic power from the West to the East, but it also risks replicating colonial-era patterns of resource extraction under new guises. In contrast, India’s own financial history includes models like the chit fund system in Kerala or the microfinance movements in Andhra Pradesh, which prioritise social welfare over shareholder returns. The deal also contrasts with China’s state-led approach to foreign investment, where strategic sectors are often shielded from majority foreign control.

Empirical research on financial deregulation shows that increased foreign ownership of banks can lead to higher interest rates, reduced credit access for SMEs, and increased volatility in local economies. Studies from the IMF and World Bank highlight that while foreign banks may improve efficiency in some contexts, their presence often correlates with higher systemic risk, particularly in emerging markets with weak regulatory frameworks. The RBI’s decision to relax ownership caps lacks peer-reviewed analysis on the long-term macroeconomic impacts.

From a spiritual perspective, the concentration of financial power in the hands of a few institutions risks eroding the ethical foundations of banking, which in many traditions are tied to concepts of dharma (duty) or zakat (obligatory charity). Artistic movements in India, such as the 'Banking on the Margins' initiative by artists in Mumbai, critique the dehumanisation of finance and advocate for models that prioritise community well-being. The deal also reflects a broader cultural shift where financial institutions are increasingly seen as abstract entities divorced from human needs.

If this trend continues, India’s mid-tier banking sector could face consolidation, with foreign-owned banks dominating urban centres while rural areas remain underserved. Scenario modelling suggests that in a global recession, foreign-owned banks may prioritise repatriation of capital, exacerbating liquidity crises in host countries. Alternative futures include the revival of cooperative banking models or the implementation of capital controls to protect domestic financial sovereignty.

The deal disproportionately affects marginalised communities, including rural farmers, small business owners, and low-income depositors, who rely on local banks for credit and savings. Women-led self-help groups, which often depend on cooperative banks for microfinance, may face reduced access to credit as foreign banks prioritise higher-return urban markets. The voices of bank employees, particularly in RBL’s existing workforce, are also at risk of being sidelined in favour of cost-cutting measures by the new majority owner.