Mumbai: The Reserve Bank of India is expected to undertake a major review of the norms for foreign banks setting up operations in India even as the capital market regulator SEBI proposes to raise the foreign investment cap in domestic stock exchanges.

The Reserve Bank of India (RBI) has proposed a ''wholesome review of thr road map'' towards liberalising norms for foreign banks starting operations in the country, V Leeladhar, deputy governor said.

The first phase of the roadmap of foreign banks was coming to an end in March next year, he said, adding, a ''wholesome review has to be made.''  

RBI allowed foreign banks to establish presence by way of setting up wholly-owned subsidiaries (WOS) or conversion of existing branches into a WOS, under the first phase of liberalisation in the banking sector.

The first phase of liberalisation, initiated in 2005, was aimed at giving a chance to the domestic banks to strengthen their presence and financial positions through consolidation and reform process, he said.    

The capital market regulator Securities and Exchange Board of India (SEBI), meanwhile, is examining a proposal to raise the limit for single investors in stock exchanges to 15 per cent from the current five per cent, reports quoting SEBI sources said.

''The decision to revisit the existing norms on investment in stock exchanges has been prompted by the fact that the current cap on equity holdings could act as a deterrent to potential promoters of new exchanges,'' the report quoted sources as saying.

A final view will be taken ''after seeking wider comments", the report said.

The new cap would be applicable for local and foreign investors, the paper said, and would enable existing investors to raise their stakes further.

The government caps overall overseas investment in Indian bourses at 49 per cent with 26 per cent cap for foreign direct investments and a 23 per cent limit for foreign institutional investment.

Deutsche Boerse and Singapore Exchange acquired 5 per cent each in the Bombay Stock Exchange last year while Goldman Sachs owns 5 per cent in the National Stock Exchange. NYSE Euronext has a 5 per cent stake in in Multi Commodity Exchange, India's largest commodity bourse.