IndusInd seeks nod for beachhead abroad

IndusInd Bank has approached the Reserve Bank of India (RBI) seeking a licence to set up an overseas branch.

Currently the bank has two representative offices in London and Dubai.

However, the idea is to open up an overseas branch at the earliest in any country in order to capitalise on the non-resident Indian (NRI) deposit business, explore the foreign exchange and treasury opportunities through corresponding banking in neighbouring countries as well as mobilise foreign currency denominated deposits under the $25,000 scheme.

Speaking to Business Standard, Moses Harding, executive vice president treasury, international operations and investment banking, IndusInd Bank said that with the pressure on the rupee and interest rates hardening overseas, there is a growing demand for Indians to invest abroad.

Without an overseas branch, IndusInd is not currently in a position to mop up foreign currency deposits as per the norms laid down by the central bank.

"The idea behind setting up an overseas branch is to undertake operations which cannot be serviced through our domestic branches," Harding pointed out.

Since the RBI has put a cap on the interest rate offered on NRE deposits pegged at the London inter bank offer rate (LIBOR), this has discouraged NRI inflows into the country.

Banks with overseas branches on other hand, are in a position to offer more attractive rates for its NRI clients, supported by the bank's domestic network, he added.

"We are looking at getting a licence in any country where the process is the easiest," said Harding.

After getting RBI in-principle approval for an overseas branch licence, the private sector bank with a networth in excess of Rs 820 crore, will decide on a country where getting a licence from the local central bank authority is the easiest. It is likely to look at places like Bahrain and Kuwait where foreign banks can easily get a branch licence.

Moreover, it proposes to eat into the market share of multinational banks in the Asean and SAARC regions by offering treasury and forex derivative products, said Harding.

Our neighbouring countries like Bangladesh and Sri Lanka are currently serviced by MNC banks, which charge high premiums for correspondence banking. IndusInd Bank hopes to offer more competitive products to local banks in these regions.