Web of regulations could come in way of prospective foreign lenders looking to take over banks

That investors jumped at stocks of old private sector banks last week hoping that they could become takeover targets for a Citigroup, or a HSBC, was surprising to many old-timers. Investors have been here in the past, but only to carry disappointment home. And it may be no different this time.  City Union Bank rose 3.5%, Karnataka BankBSE -5.11 % advanced 14.9%, and Karur Vysya BankBSE -0.48 % climbed 6.1% after the RBI governor Raghuram Rajan in Washington indicated that foreign banks could get a level-playing field in India and they could even acquire functional banks. But what he did not say was the caveat that would accompany that freedom. 

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