Singapore to give national status to foreign banks

Singapore is set to become the hottest destination for India's private sector banks with the Singaporean government proposing to give national status to foreign banks setting up operations in the county.

This move is seen as a key that Indian banks could use to open up the doors to the long-forbidden retail market of Singapore.

"With national status accorded to Indian banks setting up shop in Singapore, they will be able to access retail business," said Tharman Shanmugaratnam, deputy chairman of the Monetary Authority of Singapore.

However, a key attraction that Singapore offers over other Asian countries is that it is a relatively freer market, said Nageshwar Rao.

Though, six Indian public sector banks and ICICI Bank have operations in Singapore, however, these weren't allowed to access the country's retail market so far.

HDFC Bank is also exploring an alliance with a local bank in Singapore. Aditya Puri, managing director of HDFC said, "Singapore would act as a hub for Asia."

Similarly, IDBI Bank, which has applied for a rep office licence in Dubai, is also exploring opportunities in Singapore. "Singapore offers us the option of setting up an offshore banking branch," said G V Nageshwar Rao, managing director, IDBI Bank.

ICICI Bank already has a foot-hold in Singapore and proposes to expand its operations there.

"We have yet to receive Reserve Bank of India (RBI) approval, but there are plans to make Singapore a hub for our Asian regional business," said ICICI Bank senior general manager & head international banking group Bhargav Dasgupta. The bank's focus is on corporate business, private banking and trade finance business.

Indian banks want to use Singapore as a platform to expand in the region. Bank of India has set up a global processing center at its Singapore branch, which consolidates processing for all its 17 global branches.

ICICI has used its Singapore branch as a launching pad for innovative products to tap the non-resident Indian.

Indian banks are also exploring their ability to raise funds through their Singapore operations.

ICICI Bank's Singapore branch raised $300 million as part of its larger plan to raise $1 billion in eurobonds medium-term notes to fund its overseas expansion plans. State Bank of India (SBI) listed its $400 million bond issue on the Singapore Exchange.

Besides, ICICI Bank, Indian Overseas Bank, Indian Bank, Bank of India, State Bank of India, UCO Bank and Export and Import Bank of India also have operations in the country.

Many Indian banks have sought to enhance their overseas presence in Asian countries but face bottlenecks in terms of regulatory issues.