Union Bank seeks licence for China office

Union Bank of India (UBI) is planning to open a representative office in China. A UBI official informed that the bank has applied for a licence to the Reserve Bank of India (RBI) to open a representative office in China. The go-ahead from the RBI is expected in the next three months.

Meanwhile, bank is yet to open its proposed representative offices in Dubai and Doha, though.

The UBI official said the approval to set up a representative office in Dubai and Doha is still pending with the Central Bank of Abu Dhabi.

"We had got the licence from RBI to set up a rep offices in these two places and had filed it with the Central Bank of Abu Dhabi in September 2003," he added.

Setting up offices in Dubai and Doha would mark the first of UBI's overseas presence.

A senior banker said that an overseas rep office is usually a prelude to any bank opening a branch in that country.

The representative office tests the market potential for opening a branch. It provides information and liaison requirements of Chinese and Indian businesses for furthering the trade and synergies between the two countries.

In south east Asian countries such as Singapore, Malaysia, Korea and Hong Kong, the foreign banks can directly open branches with a stipulated capital investment.

However, in China they are allowed only to set up rep offices. The bankers are calculating that this restriction will go in the next two years and they will be allowed open branches in China as well.

The current foray of opening rep offices in China is in preparation of such an eventuality.

State Bank of India, Canara Bank, ICICI Bank and Bank of Baroda have representative offices in China. Indian Overseas Bank had recently got the licence from RBI to open a representative office in China. Vijaya Bank too plans to do the same.