Indian bank to open two more branches in China
State Bank of India (SBI) is moving ahead of its domestic rivals, with plans to open two more branches on the mainland, aiming to further profit from booming Sino-Indian trade, which is expected to top US$100 billion in three years.
Chairman Pratip Chaudhuri said yesterday that the largest bank in India was giving the China market priority, as both countries were working closely to add further momentum to growth in bilateral trade.
SBI has a branch in Shanghai that offers a full range of banking services, including local currency business.
Chaudhuri said the bank had applied to the China Banking Regulatory Commission to upgrade its Tianjin office to a branch, and was planning to set up a third mainland branch in Guangzhou.
'India and China recorded the highest rates of economic growth, and developments in the fields of trade and investment will create tremendous opportunities,' he said. 'We believe the 21st century belongs to China and India.'
Bilateral trade is valued at US$60 billion, and the chairman predicted the figure would hit US$100 billion in two to three years. Indian banks including SBI, Bank of India, ICICI Bank, Axis Bank, Canara Bank and Bank of Baroda are among the latest foreign lenders to have gravitated to the mainland, actively seeking expansion and to help consolidate economic ties between the two countries.
To date, SBI is the only Indian lender that has obtained a licence to do yuan business.
In India, the bank has more than 18,000 branches and has total assets of more than US$274 billion.
Its Shanghai branch currently focuses on trade finance, and reported 35 per cent business growth from last year.
Chaudhuri said the mainland business would grow 25-30 per cent annually, benefiting from booming bilateral trade.
China, dubbed the world's manufacturing hub, and India, which has an edge in the services sector, can complement each other as bilateral trade and investments grow.
Loan demand has increased in the past few years as more Indian companies have flocked to China to set up facilities, according to Hemant Contractor, SBI managing director in charge of international business.
Indian lenders still lag far behind global banking giants such as Citigroup and HSBC in expanding their China operations.
But SBI is in a strong position to support Indian companies expanding overseas because it has the largest distribution network operating outside the country.
It has a global presence with 172 outlets in 34 countries.
Contractor said a few Indian companies were now settling trade deals with their Chinese partners in renminbi after Beijing unveiled its ambitions to internationalise the currency.
'We are encouraging our customers to use renminbi for trade settlement,' Chaudhuri said.
'But I think it might take a little longer for renminbi to receive international reference currency status.'