India, Pak to allow 3 banks in each other's country: Minister

India and Pakistan are working to allow three banks to set up branches on each other's soil to normalise trade relations and boost commerce, Minister of State for Commerce Khurram Dastagir Khan has said.
The two sides had agreed in August 2012 to issue a full banking licence to two banks from each country. However, normalisation of trade was hit after Pakistan failed to deliver on a commitment to grant Most Favoured Nation-status to India in January last year.
"We were told that the Reserve Bank of India had since, I would say, lessened its restrictions, it is no longer two banks. Any bank that fulfils the requirement can apply. For the time being, we are working on three banks each," Khan told PTI here.

The issue of setting up bank branches on each other's soil was raised with Indian Commerce Minister Anand Sharma by Pakistan's Punjab Chief Minister Shahbaz Sharif when he visited New Delhi recently.
Khan, who left for India today to participate in a SAARC business meet, said, "The State Bank of Pakistan has just written to the RBI that three banks would like to open their branches in India. I don't know when but it will happen. Some movement has taken place."
In 2012, the two Indian banks allowed to operate in Pakistan were the State Bank of India and Bank of India. On the Pakistani side, the quasi-state owned National Bank of Pakistan and privately owned United Bank Ltd were selected for running full banking operations in India once they obtained licences.

However, there has not been much forward movement on the issue.

Khan, a top leader of the ruling PML-N party, argued that the biggest hurdle to normal trade ties was the "very restrictive visa regime".
"People cannot travel to the other country. Visa is not something that appears on trading figures but is very substantial. If businessmen from one country cannot travel to another country and see firsthand and analyse the economic opportunities that are there, then trade is severely hampered," he said.
"Visa restriction is what we call a non-tariff barrier," he added.
Khan pointed out another issue not reflected by trade figures was the lack of bilateral banking relations.

"That is also not a trading issue but is a necessary facility required for trading. So banking relationship has to be there. Another issue that we will talk about, maybe not in this trip, is to allow communication network. Allow roaming," he said.
"And here I am quite definite that obtaining a SIM in Pakistan is miles easier than it is in India. So if people can't communicate and use the banking channel, and if they can't travel, it is a hurdle to trade," he said.