Indian banks want to catch train to Pakistan

SBI, PNB, J&K Bank and ICICI Bank keen to set up shop.

Riding high on the Indo-Pak cricket wave, Indian commercial banks are moving the finance ministry and the Reserve Bank of India (RBI) to set up shop in Pakistan.

State Bank of India is believed to have informally discussed the issue with the ministry. J&K Bank has moved the government on this. It plans on applying to the RBI for permission to open branches in Pakistan. It had two branches in Pakistan-occupied Kashmir, at Muzaffarabad and Mirpur. "Once the road connection between Muzaffarabad and Srinagar opens in August, these old branches can be reopened if the governments agree," said a J&K Bank executive.

To set up establishments in Pakistan, Indian banks do not need fresh licences as they had branches there that the Pakistan government seized in September 1965 after the Indo-Pak war. In fact, Indian banks had 17 offices in Pakistan that are treated as enemy property. Similarly, Indian banks had 22 offices in Bangladesh, the erstwhile East Pakistan.

"If both the governments agree, Indian banks can revive the old branches. It will be an enormous business opportunity as India and Pakistan are planning to build new trade ties," said a senior banker.

At present, no Indian bank operates in Pakistan. State Bank of India has a branch in Dhaka, opened in 1975. Bank of India, Imperial Bank of India (the earlier avatar of the State Bank), United Commercial Bank, Canara Bank, Allahabad Bank and Central Bank of India had branches in Pakistan.

Most of the Indian bank branches were located in Karachi, Lahore and Peshawar in Pakistan and Dhaka and Chittagong in Bangladesh. In 1946, even the RBI had an office in Karachi, where Punjab National Bank was headquartered. Oriental Bank of Commerce was headquartered in Lahore.

Leading Indian businessmen and a few Indian bankers met Pakistan's foreign minister Shaukat Aziz and governor of the State Bank of Pakistan -- the country's central bank -- on Saturday.

 "It may take a while for the two countries to open up the banking and finance sector. Pakistan is keen to open up the tourism and infotech industries first," said a banker who was part of the ICICI Bank team which went to Pakistan to watch the fourth one-day international cricket match at Lahore and exchange business ideas with Pakistan.