IDBI Bank plans centres in Bahrain, Dubai

IDBI Bank is exploring options to set up an offshore banking unit in Bahrain or Singapore to grow its trade finance business.

The bank has also applied to the Reserve Bank of India (RBI) for permission to open a representative office in Dubai.

"International branches are necessary to cater to the growing Indian clientele that is mushrooming overseas, either by setting up new businesses or acquiring small companies," IDBI Bank managing director Nageshwar Rao said.

"The offshore branch will act as a business hub to source trade business from the Asia-Pacific region," he added.

"The bank will offer wholesale banking products and remittance products at these branches," said Rao.

The advantage of an Indian bank over a local bank overseas is that, since the Indian bank 'knows' the corporate client, it is possible for it (the bank) to take a greater exposure and give better rates on bill discounting and letters of credit to Indian firms.

Further, Indian banks have an edge in that they understand the business needs of the clientele better than foreign players, added Rao.

"The bank is looking at exploring the Middle East market to acquire a pie of the remittance business which is around $18 to $20 billion annually," said Rao.

According to balance of payments figures released by the RBI, worker remittances to India rose to $18.2 billion in 2003, posting a growth of 30 per cent over 2002.

Meanwhile, on the domestic front, IDBI Bank is looking at strengthening its retail assets portfolio with the introduction of new products, he added. The bank's retail assets as on December 31, 2004 stood at Rs 5,132 crore, of which home loans accounted for Rs 4,188 crore.