Fgn banks yet to get RBI nod for branches

Banking regulator Reserve Bank of India is sitting tight on branch authorisation applications of foreign banks that have strong presence in India.

In the current financial year, the banking regulator has not yet granted any new branch licences to banks like Hongkong and Shanghai Banking Corp and Standard Chartered Bank that have strong presence in the country.

HSBC officials confirmed that it has not received approval to open any new branches in the country this financial year. With less than 40 days left for 2007-08 (April-March) to get over, these banks are not hopeful for a favourable outcome.

The RBI has, however, granted licences to Deutsche Bank and Barclays Bank that have fewer branches and also recently to Swiss bank UBS for its maiden branch. While Standard Chartered had applied for about 20 branches for the current financial year, HSBC had applied for nearly 50 branches. Standard Chartered has 83 branches in 33 cities and HSBC has 47 branches in 26 cities.

The reason, however, is still not clear on why RBI has not given approval to these banks so far.

"Nobody knows why the RBI has not granted branch licences to us for the current financial year," said a top executive at a foreign bank.

The RBI, so far, has adopted a restrictive policy towards giving branch licences to foreign banks. In a particular year, the number of branch licences granted by the RBI to foreign banks is around 12.

Keeping 2009 in mind, when the banking sector will be opened to foreign banks, these entities are beefing up their capital base to both for inorganic and organic growth. The last few months has seen some foreign banks like Deutsche Bank and BNP Paribus infusing fresh capital to shore up their capital base.