3 Singapore banks get RBI approval to set up shop

The Reserve Bank of India has specified that three Singapore banks "" Development Bank of Singapore (DBS), Overseas Chinese Banking Corporation and United Overseas Bank "" will be granted licences to set up 15 branches within four years.

These three banks will operate as wholly-owned subsidiaries in India, as per the Comprehensive Economic Cooperation Agreement (CECA) signed between the two governments.

According to the Indo-Singapore treaty, the Singapore government will grant permission to four Indian banks to undertake wholesale banking operations.

This will be in addition to granting three Indian banks full branch status, wherein they would be permitted to carry on retail operations in Singapore including operating an ATM network.

Sources said that State Bank of India, ICICI Bank, Bank of Baroda and Bank of India are likely to get full branch licences.

Banking sources added that by opening a branch in Singapore, Indian banks will be able to increase their presence there, and also access the rest of East Asia. Singapore is well connected to other East Asian countries being the financial hub.

Moreover, with increasing presence of Islamic banking in Malaysia and Indonesia, Singapore is fast emerging as the hub for Islamic banking as well.

According to trade analysts, the comprehensive treaty with Singapore is likely to benefit India in terms of services and investments. Singapore is a global financial centre with around 7,000 multinational companies and 600-odd financial institutions operating there.

The fineprints of the treaty highlight four major components including a free trade agreement (FTA) in goods, an arrangement for boosting trade in services, a package to promote investment flows and provide mutual investment protection as well as a new agreement for avoiding double taxation.