RBI clears Mahabank Malaysian joint venture

The initial capital of the proposed bank will be Rs 345 crore.

The Reserve Bank of India (RBI) has given approval to the proposal to set up a joint venture banking company in Malaysia by Bank of Maharashtra (Mahabank) in partnership with Bank of Baroda (BoB) and Oriental Bank of Commerce (OBC).

B K Piparia, general manager (planning), Bank of Maharashtra, said that the joint venture partners will now approach Central Bank of Malaysia for clearance.

The initial capital of the proposed bank will be Rs 345 crore, 40 per cent of which will be contributed by Bank of Baroda while the other two partner banks will contribute 30 per cent each, he said.

Piparia said the RBI approval, given on March 13, will be valid for one year, though the joint venture will be established much earlier.

S C Basu, chairman and managing director, Bank of Maharashtra, confirmed that the bank has initiated steps to establish a joint venture banking company in Malaysia.

The banks had approached RBI through Bank of Baroda for necessary approval, Piparia said. The Malaysian government has been encouraging foreign banks to establish subsidiaries and undertake banking activities without any restriction on repatriation of capital and remittance of dividend.

The Malaysian financial sector master plan has provided more avenues for foreign banks to participate in the reforms process and developmental activities for mutual benefit.

The joint venture will help the promoter banks to strengthen presence in the south east and far east countries.

Piparia said the new bank, with the initial capital of Rs 345 crore, can create an asset base of close to Rs 2,800 crore in the beginning itself.

On getting the clearance from the Central Bank of Malaysia, the joint venture bank will sign a memorandum of understanding with the Malaysian government.

"Issues such as name of the venture and its staffing pattern including representation of the promoting banks will be given in the MoU," Piparia elaborated.