The Hindu Business Line : Six banks vie for three Singapore licences

IN what is said to be "nothing more than an understanding" under the rubric of the Comprehensive Economic Cooperation Agreement between India and Singapore, three banks from each country will be given full-fledged banking licences in the other. Six Indian banks that have a Singapore presence — Indian Bank, Indian Overseas Bank, Bank of India (BoI), UCO Bank, State Bank of India (SBI) and ICICI Bank — have started lobbying for the three licences.

Although these banks are present in Singapore, their operations are restricted. Two banks — SBI and ICICI Bank — have only what is known as ABU licence — for Asian Banking Union — which allows them to deal in only US dollars.

Three others — Indian Bank, IOB and UCO — have another kind of licence that allows them to operate in Singapore dollars also. Only one bank — BoI — has both licences.

However, none of these banks is allowed retail banking. They cannot, for instance, issue ATM cards or participate in local electronic payment systems.

A full-fledged banking licence would allow them to get into retail banking too, which is said to be lucrative. Thus, all the six banks are in the race for the proposed three licences.

The Monetary Authority of Singapore (MAS) will finally decide which, if any at all, of the Indian banks should get the licence. For this it would expect the banks to meet with certain basic qualifying criteria such as balance sheet size, compliance status, IT prowess and capitalisation. These, however, are not believed to be major hurdles, as all the six expect to qualify.

According to sources, lobbying has begun in right earnest. The Chairman and Managing Director of Indian Bank, Dr K.C. Chakrabarti, confirmed to Business Line that he did bring up the issue with the Finance Minister, Mr P. Chidambaram, when the latter visited the bank on November 15. Sources say that Indian Bank is not the only one to have requested Mr Chidambaram to help them lobby with MAS through the RBI — in fact, all the six have, they say.

Each bank believes it has a reason to get a licence. SBI plays the "biggest Indian bank" card, while ICICI Bank points out it is the biggest in the private sector. Other banks stress they have been present in Singapore for close to half a century.

"We have been in Singapore for over 53 years, we have both licences," points out Mr M. Balachandran, Chairman and Managing Director, BoI, which is one of the top five banks in India, with a total business of Rs 146,000 crore. BoI also has the largest overseas operations for any Indian bank.

Indian Bank believes that it is the best-known Indian bank in Singapore and has been there for over 40 years.